Disbenefits of foreign TNC investment, prior to and after MAI
By Don E. McAllister, Canadian Centre for Biodiversity, 14 December 1997
Canada's federal governments have argued that foreign investment is "a good thing" for Canada, perhaps having this whispered continuously in their ears by the branch plant business community. Perhaps not being an economist, I have not understood what the benefits were. But still, if a foreigner or a transnational invests in Canada, surely they are not doing it for our benefit. They plan to take out enough profits to make it worth while, and in the end their capital loan is paid off and they earn a tidy profit. If we had had a Canadian company, more of both capital and profit would have remained here.
"The Canada in the Global Economy' chapter in the "1997 Canada Year Book," pp. 291-309, has the following paragraph of interest, perhaps indicating that I am not wholly wrong, on page 293:
"Canada's Current Account has shown a deficit almost every year for the last 40 years. Throughout this period, we have exported more goods than we have imported. However, we have bought far more services from other countries than we have sold, and we have paid more interest to foreign investors than we've received from our investments abroad. This deficit in non-merchandise trade has more than offset our surplus in merchandise trade. Net interest payments to investors in other countries is the largest contributor to our Current Account deficit. This is because over the years Canada has relied heavily on capital from the savings of foreign countries to finance its investment and spending." Its probably worth while reading more of this chapter, as well as others to get facts.
On a previous page the 1997 Canada Year Book states that our deficit in non-merchandise trade (travel, freight, business, government and other services, as well as investment income and transfers) totalled $41.4 billion in 1995. Now over the last 5 years there has been a huge hue and cry about our government debt and the deficit - the accumulated debt of the Canadian government and the amount the government spends over what it receives each year. But this business hue and cry has failed to mention the huge national outflow of money to pay transnational investors. The only voice to speak clearly and consistently on this issue, that I know of, has been Mel Hurtig - nationalist, publisher of the Canadian Encyclopedia, and head of the National Party which only a few Canadians voted for. Of course there are other debts too, that political parties and corporations do not discuss, or at least in public - the environmental debt (see the latest and last (the government killed it) State of the Environment Report in book or CD ROM form, the social debts (health, education, disrupted families, dormant unused talent amongst the unemployed, and simple unhappiness, amongst many others).
So my point is we do not need more foreign investment. It doesn't pay in the long run. It results in more money flowing out in the end, then comes in. And we as a nation have less influence over transnational corporations than domestic corporations. But the MAI will facilitate the buying up of more of Canada by foreign capital. If MAI goes, ahead we can expect more Allmarts, more Macrocofts, and more Macrodonalds, and a worsening balance of payments.
Don E. McAllister /f Canadian Centre for Biodiversity
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