The changing importance of foreign control in Canadian manufacturing /John R. Baldwin and Jiang Li.: CS11-0019/387E-PDF

"This study examines changes in the importance of foreign ownership in Canadian manufacturing between 1973 and 2011. At the aggregate level, the market shares of foreign-controlled firms experienced two episodes of decline, interrupted by an intervening rebound. The foreigncontrolled share of nominal manufacturing output declined from 50.8% in the 1973-to-1975 period to 46.5% in the 1984-to-1986 period. It then returned to 50.7% by the 1997-to-1999 period, before declining again to 44.6% by the 2009-to-2011 period. These three episodes corresponded to alternating periods of weakness and strength in the manufacturing sector, changes in regulatory regimes and exchange rate fluctuations. In the more recent post-2000 period, almost all of the individual industries (defined mostly at the three-digit North American Industry Classification level) experienced declines in foreign control, with the exceptions of primary metals and paper industries wherein foreign control expanded. The increase in the relative importance of petroleum, coal and chemicals, where foreign control was higher than average, tended to offset the decline in other industries and to moderate the overall decline when measured at the aggregate level. Across industries, the decline was smallest in the industries that depended the most on natural resources and that involved scale economies in the production process. The decline was largest in the industries that were more labour intensive."--Abstract.

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