Lower taxes = lower competetiveness
In 2001, the World Economic Forum (WEF) ranked canada 3rd in competetiveness. By 2007, after a series of major cut backs, we were all the way down to 13th place.
Competetiveness is defined by Harvard "competetiveness" expert, Michael Porter as "a measure of how well a country uses the skills of its people, its investments, and its knowledge to efficiently produce goods and sevices others want to buy".
A powerful tool for measuring efficient and most up-to-date uses of producing the goods and services others want to buy, is through investments in Research and Development ( R&D). Canada ranks 25th place from other OECD countries in the percentage of R&D performed by industry.
Why is that? Thank foreign take overs. Why would foreign companies that are taking well over half of all oil and manufacturing revenues, want to invest in R&D here?
In 1985, Trudeau introduced the Foreign Investments Review Act, in a bid to lower foreign takeovers. In the ten years following the act and creation of the Foreign Investments Review Agency, foreign control dropped to 21.4%. Then Mulroney entered, and abolished the Foreign Investments Review Agency, calling Canada "open for business". From June 30, 1985-end of 2007, 10,807 Canadian companies were taken over by foreign corporations. What did this mean for Canada? That from the 834.86 billion made by these companies, a pathetic 2.3 % was invested back here. In 2005, foreign shares of corporation revenues was at 30%, with profits up at 30.5%, the highest ever in 30 years.
I want to see Canada back at third place from 2001 competetivness ranking and moving forward to 1st place. I want to see the lost 98.7 % of foreign takeover revenue being invested in our infrastructure, R&D, prosperity and longevity.
Claudia Rodriguez Larrain, federal Candidate and CEO for Vaughan EDA.
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Competitiveness...
Our currency has undergone significant increase in valuation over the last 10 years. This automatically results in wage inflation, which reduces competitiveness.
If you want to get into an argument about competitiveness, staunch libertarians will win: no labour protection, no worker's rights, no minimum wage, etc. This will yield massive improvements in competitiveness. I'm not sure what that gets us. Do we want to win the most-competitive environment title?
Regarding foreign takeover revenue leakage, let's say a foreign entity comes in and purchases a domestic entity. But now let's say their foreign investments yield a doubling of overall profits, does that mean that Canada has had a negative experience? It's too hard to say. Canada may be retaining much more money through domestic labour costs. What if a domestic company was already 45% owned by foreigners, or if domestic owners end up moving their money into foreign jurisdictions anyway? What if a company faced risk of downsizing or foreclosure if not sold to foreign interests?
Long passed is the time where you can say that domestic ownership of an enterprise is the guarantee for Canadian prosperity. I thought Greens had little concept of borders. Why erect one for mobility of wealth?
Foreign investment, ours and theirs
Foreign investment is easy to hold up as a villain because it plays to fears that Canada is being sold out to foreigners who don't have our interests at heart. The other side of the coin, investment from Canada into foreign countries, is usually and conveniently left out of that discussion.
The last time I checked accumulated foreign investment in Canada and Canadian investments abroad were roughly in the same ballpark at just under $600 Billion each. As long as a balance is maintained there’s a lot less to get worried about.
There are good reasons to discourage trade or foreign owernship in certain, specific circumstances but generally speaking, if they didn't help both countries involved they wouldn't be so popular.
Ard Van Leeuwen (Dufferin-Caledon, ON)
The views I express on this blog are purely my own and should not be construed to represent the official position of the Green Party of Canada.
Ard, you seem to
Ard, you seem to be resonating to Harper's notorious statement that foreign takeovers will only be approved if they produce a "net benefit" after being reviewed by Investment Canada.
A Toronto star editorial answered this right: "Whether a takeover confers a net benefit is beside the point if that benefit is not greater than the one Canada would realize were the firm to continue operating under Canadian control".
And as to the "approval process" of the prankster con artists at Investment Canada: Investment Canada has never turned down a single takeover of the 12.5% of takeovers it has ever reviewed.
Where do you draw the line?
Is it okay for you to trade with another tribe? How about trading between cities? Provinces? What's so special about trade between countries? I do fully support fair trade, however.
But if you look at the most recent example of Potash, fear is overrated. It's the reverse of fair trade. A third world country is employing first world labour to produce a good for itself. And you can practically put a shovel in the ground anywhere in Saskatchewan and find Potash. It's a labour intensive operation, and there are royalties and taxes paid.
We are not in any danger of running out of Potash any time soon (or ever.) If China wants to export all of Potash Corp's production to their homeland, good on them. We can simply produce more. And as a matter of fact, we should be progressing toward not needing it all anyway.