Silent Surrender - The Multinational Corporation in Canada 0773523251, 978-0773523258

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Silent Surrender the multinational corporation in Canada

Silent

Surrender the multinational corporation in

Canada

Kari Levitt with a preface by

Mel Watkins

Macmillan of Canada

/

Toronto

® Kari Levitt 1970

—

no part of this book may be reproduced in any form without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a review written for inclusion in a magazine or newspaper. All rights reserved

ISBN 0-7705-0374-8

Library of Congress Catalogue Card No. 74-123193

Reprinted 1972, 1974, 1975, 1979

Printed in Canada for the

Macmillan Company of Canada Limited 70 Bond St., Toronto

Contents

Mel Watkins

Preface

3.

The Re colonization of Canada The Old Mercantilism and the New The Rise ofthe Nation State

4.

Regression to Dependence

5.

PT/zo

1.

2.

(5.

7.

Decides?

Harvest of Lengthening Dependence

Appendix:

1 1

46 58 71

Metropolis and Hinterland TTz^

ix

xix

Introduction

92 116

The New Mercantilism of U. S Direct Investment .

1 57

List

1

.

2.

of Tables

Foreign Direct Investment in Canada, 1 945 and 1 965

60

Non-Resident Control as a Percentage of Selected

Canadian Industries, 1926-1963 3.

Foreign Capital Invested in Canada, Selected

4.

Changes in Canadian Long-Term Indebtedness,

61

Year Ends

66 67

Select Periods 5.

Locusof Control of Canadian Industry, 1963

6.

Concentration of Foreign Direct Investment in the

7.

R and D Expenditures as Percentages of Manu-

Commodity-Producing Sectors, 1 963 facturing Industry Sales,

1

22

Canada and the

United States 8.

120

132

Relationship Between Research Effort and Export

Performance of 19 U.S. Manufacturing Industries

134

Appendix 1

.

Geographic Distribution of U.S. Direct Investment, 1897-1966

2.

Industrial Distribution of U.S. Direct Foreign

3.

Net Annual Flows of U.S. Capital for

Investment

Direct Investments

160-1

162

162

4.

U.S. Annual Outflow of Direct Investment in

Canada as a Percentage of U.S. Direct Investment

in all Countries,

1950-1964

5.

Value of U.S. Direct Investments Abroad

6.

Capital Outflows, Remitted Incomes and Net

in

163

1966

164

Balance of Direct U.S. Foreign Investments,

1

900- 1 967

1

7.

"Capital Accounts" According to Industrial and

8.

Capital Outflows, Incomes and Net Balances of

Geographic Sectors, 1950-1964

66

167

U.S. Direct Foreign Investment, by

Geographic Regions and by Industries 9.

1

Remitted by U.S. Subsidiaries (Percentages) 10.

.

170

S ome Characteristics of U S Direct Investment .

.

in the Sixties (averages for period 1 1

68-9

Sources of Property Income and Royalties

1

960-67)

1

72

Capital Outflow of 1 9 Participating Companies,

1957-1960

178

12.

Sourcesof Funds of U.S. Foreign Subsidiaries,

13.

Acquisitions and Sales by U.S.

Three-year Average

( 1

963- 1 965)

1

80-

Companies of

Foreign Enterprises 1 963- 1 967

183

Preface

This book makes a signal contribution to the debate on foreign

ownership which increasingly comes to the fore in Let us hope that

it

succeeds in pushing us closer

— to a strong and positive policy toward the poration, taming alternative to

it

for the near future

for the long run.

would join me

Levitt

come

it

in that

I

— much closer

multinational cor-

and finding an

feel confident that

effective

Professor

hope. For, as the reader will soon

to realize, while Professor Levitt clearly has the skills of

the professional economist

and uses them here with great

she does not play the all-too-common academic ing only for her peers ity.

this country.

game

effect,

of writ-

and of pretending detachment and neutral-

Rather she writes plainly and forcefully so as to show us the

need for alternative s. She tellectual,

one

who

is,

in the best sense of that term,

criticizes the status

an

in-

quo, and prods us into

working out new strategies.

The debate t o which Professor utes

is

one that has

com e

have used a book such as

American

direct

i

Levitt so effectively co ntrib-

late in the^ this a

nvestme nt

in

day for Canada.

century ago

Canada was

when

We

could

the process of

just beginning.

That

process was to pick up sharply in the years following the high

and by 1913 important sectors of the Canadian economy had already been alienated into foreign

protective tariff of 1879,

hands. France produced a Servan-Schrieber crying for action

when France had about as much American investment proportionately as Canada probably had by the beginning of this cenix

X tury.

Not

till

decade did Canada find

this past

He may

Walter Gordon.

don's Choicefor Canada

well have is

late,

Cassandra in

for

if

Mr. Gor-

one of the most important books of the

Canadians, so too

sixties for

come too

its

is

^

George Grant's Lament for a

Nation.

That

is

not to say that Canadians have been unaware of the ex-

economy. It is sometimes said was the great paradox of Sir John A. Macdonald's National Policy that the very tariff which was intended to reduce | economic dependence by Umiting imports in fact increased economic dependence by encouraging the entry of branch plants to tent of foreign ownership of their

now

that

it

produce behind the dian capitalists

tariff wall.

But Sir John A. and the Cana-

who supported him appear

to have been all too

conscious of what was happening. Indeed, the point

from deploring the

fact,

is

that far

they cited the rising investment and

growing job opportunities as proof of the effectiveness of the National Policy. Little is

now

to be gained

by wishing that

this increasing de-

pendence through foreign investment had not been

we should draw from sent day.

T he

first is

wholly reliable is

lot

concerned, and

it

so.

Rather,

two morals of relevance down to the pre-

that

Cana dian

cj^itaUst s have n ever been a

so far as standing up to foreign corporations

it is

now to shoulwe want independ-

asking a good deal for them

der a burden which they have never borne. If

we had best seek more reliable support. The secon 53

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