Flourishing in the global competitiveness game Working Paper 11 - September 2008
For Canadians concerned about the “hollowing out” of our economy, the best defence is a good offence. That is the Institute’s response to the issue of foreign takeovers, which has risen in prominence over the past few years with the buyouts of Canadian icons like Alcan, Dofasco, Falconbridge, and Inco.
While these takeovers have been highly visible, the Institute’s research shows that, over the past two decades, the number of global leaders in Canada has actually increased. They are the Canadian firms that are in the top five globally in their business niche. In 1985, Canada had 33 global leaders; the number has grown to 77 this year. These global leaders, like McCain, Open Text, and Research In Motion, have competed on the basis of innovation, globally significant capabilities, and global expansion to generate prosperity.
Although foreign takeovers usually mean that a Canadian head office becomes a foreign branch office, there is no solid evidence that such “downgrades” have a negative impact on Canada’s prosperity. In fact, such foreign investment in Canada contributes to our productivity and prosperity. Head offices, whether Canadian- or foreign-owned, are important sources of high-value jobs, and public policy should not discourage foreign takeovers in order to preserve Canadian head offices.
These are among the key conclusions of Working Paper 11, Flourishing in the global competitiveness game released today by the Institute for Competitiveness & Prosperity.
