Canadian business revolves
Another characteristic that has produced special configurations in the conduct of Canadian business revolves around a political system that has attempted to balance “national” interests against regional and continental economic pressures. For example, chapter twenty reveals that following a massive influx of American capital in Canada’s industries, US ownership grew steadily in such areas as oil and gas.
This posed a number of problems. A US balance-of-payments problem emerged in the 1960s and Washington began imposing restraints on capital outflows. In 1971, when the US experienced deficits in both trade and payment balances, import ceilings and surcharges were enforced. Although exemptions from such trade restrictions were provided, the over-dependence on the US and multinational firms became clearly evident. Consequently, the government began a series of programs aimed to protect “national” interests.
This was most evident in the National Energy Program of 1980-1981. This program was intended to expand Canada’s energy resources, augment federal control over domestic prices and exports, and reduce foreign ownership in the nation’s oil and gas industry. The Petroleum Incentives Program also provided tax benefits and subsidies to companies with more than 50 per cent Canadian ownership that embarked on exploratory ventures. Such measures created resentment from regions like Alberta that were now unable to increase prices. Additionally, the US was infuriated by the export restrictions and insults to free-market principles that discriminated against their companies.
Nonetheless, the Canadian government remained committed to their policies, signifying their dedication to protecting national interests despite harsh criticism. The above examples expose the fact that distinctive features of the Canadian government and political system have shaped the principles and nature of Canada’s unique business community. The final dimension outlined by Baskerville and Taylor centres on the international setting of Canadian business. The authors focus on explaining how Canada’s place and role in the global business environment has been defined.
This is primarily achieved by describing the impacts that multinational corporations have had in terms of shaping Canada’s business practices. For example, chapter twenty indicates that increases in world trade and international direct investment encouraged the US to develop sales and production facilities abroad. By 1960, US investment in Canada exceeded $17 billion and that figure more than doubled over the next ten years. This meant the US dominated ownership in several of Canada’s industries, resulting in severe consequences.
For example, parent companies restricted branch plants to short production runs for the small domestic market, rendering them unable to achieve economies of scale. Similarly, multinationals did not equip their subsidiaries with research capabilities or state-of-the-art processes and products. Many of the brightest Canadians were also being induced into multinational organizations while Canadian entrepreneurship remained stagnant. These conditions characterize Canada’s economic vulnerability on the international scene.
The authors then describe how aspects of the first two dimensions interact with these conditions. For instance, as earlier chapters indicate, government intervention and political systems were used as a way of contesting foreign ownership and dominance. However, the globalization of financial, commercial, and industrial markets damaged these attempts. By the early 1980s, there was a resounding push for open markets, free enterprise, and the lessening role of state in economic affairs. Overall, Peter Baskerville and Graham Taylor successfully trace the evolution of Canadian business through three interconnected dimensions.