Class Notes (834,986)
Canada (508,846)
POLS 3470 (45)
Tim Mau (45)
Lecture 4

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Political Science
POLS 3470
Tim Mau

FOREIGN INVESTMENT  INVESTMENT CANADA ACT (1985) o Governs oversight and review of foreign investments o 2 categories: o SUBJECT TO NOTIFICATION  Intention to make investment  Gov doesn’t do anything  GIVE NOTICE TO DIRECTOR OF INVESTMENTS, INDUSTRY CANADA AND SUBMIT INFORMATION o SUBJECT TO REVIEW o 3 scenarios:  NON-CULTURAL CANADIAN BUSINESS WITH ASSETS IN EXCESS OF $344 MILLION  If less investment just happens, doesn’t get triggered  Intervenes only in large companies  MINISTER OF INDUSTRY – “NET BENEFIT TEST” o Only approved by minister o Many considerations to make determination o Effect of investment on economic activity o Degree of participation by Canadians in the business o Effect of investment on productivity, technology, innovation we have available here o Impact on competition in this country o Compatibility with national, cultural, traditional policies o Ability to compete globally o Consults with prov gov, competition gov  CANADIAN CULTURAL BUSINESS WITH ASSETS IN EXCESS OF $5 MILLION OR GOVERNMENT DEEMS A REVIEW IS IN THE PUBLIC INTEREST  MINISTER OF CANADIAN HERITAGE – NET BENEFIT IF INVESTMENT MEETS STRATEGIC OBJECTIVES OF THE DEPARTMENT  INVESTMENT IS INJURIOUS TO NATIONAL SECURITY  Threaten national security? FOREIGN INVESTMENT  KEY ELEMENTS OF “NET BENEFIT” TEST o EFFECT OF INVESTMENT ON ECONOMIC ACTIVITY IN CANADA o DEGREE OF PARTICIPATION BY CANADIANS IN BUSINESS IN QUESTION o EFFECT OF INVESTMENT ON PRODUCTIVITY, EFFICIENCY, TECHNOLOGICAL DEVELOPMENT, PRODUCT INNOVATION AND PRODUCT VARIETY o IMPACT ON COMPETITION o COMPATABILITY OF INVESTMENT WITH ECONOMIC, CULTURAL AND INDUSTRIAL POLICIES o IMPACT ON CANADA’S ABILITY TO COMPETE GLOBALLY FOREIGN INVESTMENT  2007 – COMPETITION POLICY REVIEW PANEL  HEADED BY RED WILSON, FORMER CEO OF BCE INC.  IMPETUS – GROWING LIST OF FOREIGN TAKEOVERS  JUNE 2008 – FINAL REPORT (“COMPETE TO WIN”)  KEY RECOMMENDATIONS: o Proposed we weaken controls to foreign takeovers o BE MORE OPEN / REDUCE BARRIERS TO INVESTMENT ($1 BILLION THRESHOLD) o SHIFT ONUS TO MINISTER TO INDICATE WHY INVESTMENT IS NOT IN ‘CANADA’S NATIONAL INTEREST’ o ELIMINATE PROHIBITION OF MERGERS OF LARGE FINANCIAL INSTITUTIONS  Felt there wasn’t enough competition in banking industry  Wasn’t in Canadian consumers interest  Would’ve helped in regards to global competition  PUBLIC POLICY PRIORITIES o TAXATION; TALENT; CITIES; GROWTH BUSINESSES; CORPORATE DIRECTORS; ECONOMIC UNION; CANADA-US TIES  Decrease corporate income tax both fed and prov – in relation to US  Harmonization of sales tax – HST – now has occurred  Reduce paper work and cost for business to sort taxes into federal and provincial  Too confusing to have 2 separate for businesses  Decrease in personal income tax for lower and middle class income families  Talent – wanted to attract Canadian talent, investment in student education, putting caps on tuition, liberalize tuition rates (paying more) but provide more assistance who require  Greater specialization – math, science, business  Promote post-secondary sector to partner with business, increase co- op and international students –brings diversity and can charge them more – exchange programs (studying abroad)  Growth business – have capacity to grow to large enterprises, foster and encourage economic growth and prosperity  Elimination of inter barriers to trade (provinces have different standards in transportation) PROBLEMS OF FOREIGN OWNERSHIP  RETARDS CANADIAN ENTREPRENEURIALISM  REDUCES EXPORTING/TRADING CAPACITY  INCREASED OUTFLOW OF CAPITAL  INFRINGES UPON CANADIAN POLITICAL SOVEREIGNTY O EXTRATERRITORIALITY O COUNTRY CAN RESTRICT TRADING ON SUBSIDARIES (BRANCH COMPANIES) IN OTHER COUNTRIES  REDUCES CANADIAN CONTROL OVER THE CANADIAN ECONOMY  LIMITS SCOPE OF R&D ACTIVITIES O HEAD OFFICE O BUSINESS NOT INVESTING ENOUGH IN RESEARCH AND DEVELOPMENT  TAKES EMPLOYMENT AWAY FROM CANADIANS O SENIOR VP, CEO’S FROM OUTSIDE COUNTRY  FORCES CONSUMERS TO PAY HIGHER PRICES O MANUFACTURING IN HOME MARKET ONLY CAN’T CAPITALIZE ON ECONOMIES OF SCALE O CANADA IS A SATALIE OF THE US BENEFITS OF FOREIGN INVESTMENT/OWNERSHIP  ACCESS TO NEW TECHNOLOGIES o Foreign owned 19% more productive o Availability of capital o IT, lower costs  NEW MANAGEMENT SKI
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