INTERNATIONAL >
Foreign Funds in Canada Foreign ownership a n d c o n t r o l a r e k e y factors in C a n a d a ' s commercial policy by S. J. COOK
.AMERICAN
RESIDENTS
now
control
three quarters of Canada's petroleum industry, almost as m u c h of the m i n i n g and smelting industries, and about half of the manufacturing industries. This p r e d o m i n a n c e of foreign owner ship and control has been a key factor in developing commercial policy which, during the last decade, has put more and more emphasis upon Canada's ex port trade to the frequent disadvantage of domestic manufacturing. D u r i n g the federal election last March, m u c h was said on the need for reversing this trend and for building u p manufacturing a n d secondary process ing of C a n a d i a n raw materials. P r i m e Minister John Diefenbaker's new gov e r n m e n t is expected to shape its r e sources d e v e l o p m e n t policy along these lines. A c h a n g e in emphasis from ex porting r a w a n d semi-processed r e sources to a greater degree of domestic manufacturing is inevitable. Indeed, it is encouraged b y the speed w i t h which the economy has e x p a n d e d u n d e r the stimulus of foreign invest ment. Most of the foreign investment growth in C a n a d a has occurred since 1900, and this m o v e m e n t of capital h a s accelerated in t h e last few years. Total nonresident investment in 1900 was r e p o r t e d at $ 1 . 2 3 billion; by 1926 it h a d risen to $ 6 billion: and in 1956 it a m o u n t e d to $15.4 billion. For the same years, U. S. investments in C a n a d a w e r e : 1900-$168 million; 1 9 2 6 - $ 3 . 2 billion; 1956-$11.7 billion, a gain of almost 70-fold in the half cen tury. And 1957 saw further substantial growth. Investment in Canada from t h e U n i t e d Kingdom, while higher at $1.05 billion in 1900, rose only to $2.7 billion in 1956, or about 2 5 0 % . A q u a r t e r - c e n t u r y survey shows t h a t in chemicals and allied products, U. S. 84
C&EN
JUNE
9, 1958
fe^'-i
ο reign Fincmcingf Net C a p i t a l — 1956
(MILLIONS OF DOLLARS) 16,000
u. s. 32,000-
TOTAL FOREIGN
8,000
4,000
1900
1926
1956
ownership in Canadian plants grew from $89 million in 1930 to $307 million in 1955. In a closely related field, mining a n d smelting, t h e figures were $255 million for 1930 a n d $1.9 billion in 1955. A n e w country must first produce r a w materials from its o w n n a t u r a l r e sources, a n d as t h e economy develops, newly-won wealth will find its way into secondary manufacturing. W h e n t h e exploitation of natural resources b e comes large enough to attract world attention, it is only reasonable t o expect t h a t foreign capital will seek to share in t h e profits expected from industrial expansion. T h e extent of our reliance on foreign funds has not been generally realized. D u r i n g 1956 and 1957, in t h e estimate of t h e Bank of Nova Scotia, "Canada a p p e a r s t o have d e p e n d e d o n foreign resources for roughly one third of its n e t capital formation." A factor with far-reaching consequences that underlies the imbalance in Canada's international accounts has been t h e high rate of growth in t h e Canadian economy. Strong p r e s s u r e of d e m a n d for goods, services, and capital from nonresident sources accompanied these high levels of economic activity. T h e need for external resources h a s been particularly evident in the demands arising from investment activity which h a v e contributed directly and indirectly to a rise in imports; this rise outpaced t h e large expansion in Canada's export capacity which has been underway at t h e same time. Most of the foreign-financed concerns operating in C a n a d a are controlled in the U n i t e d States. A n official report notes a substantial concentration in a relatively small n u m b e r of firms. In manufacturing, some 2 5 United States controlled firms, with aggregate investments of more t h a n $25 million each, account for more than half of the investment in U . S. controlled plants in this country. Concerns with an investment of $ 1 million or more make u p 9 0 % of U. S. controlled establishments in manufacturing. These larger firms also account for 3 0 % of Canadian manufacturing production a n d 2 1 % of employment in that field. Canadians are, understandably, somew h a t disturbed b y t h e rapidly rising extent of foreign ownership and control in t h e national economy; b u t t h e concept· of control needs to b e carefully examined before conclusions are drawn. Direct investments h a v e been one means b y which industrial techniques
Guaranteed accuracy to ± 0.0025 ml. with 0.1 ml. KONTES Precision Grade Pipettes (See graph below for other sizes.9
Precision G r a d e P i p e t t e s serially n u m b e r e d ; supplied w i t h a m a t c h i n g n u m b e r e d Certificate which g u a r a n t e e s v o l u m e t r i c accuracies u p t o ± 0 . 0 0 2 5 m l . for t h e 0.1 m l . c a p a c i t y , a n d conf o r m a n c e to N B S spécifications. A c o m p l e t e line of T r a n s f e r , M o h r , Serological a n d O s t w a l d Folin P i p e t t e s — a n d n e w L o n g Tip, L a r g e Orifice a n d A u t o matic Pipettes. Full-circle m a i n g r a d u a t i o n s . C o n t i n u o u s i n t e r m e d i a t e lines for e a s y reading, less p a r a l l a x . Sharp, permanent markings. WRITE CATA
FOR LOG
FREE,
Ware and all 11,000 ware items.
234
describing
technical
Use your
-PAGE
Volumetric glass-
letterhead.
KONTES P I P E T T E T O L E R A N C E S
JHRANDSEROU) BICAl PIPETTES-LABORATORY G RADE m u n i t M 3HR PIPETTES - PRECISION GRADE • • • T ( ANSFER PIPETTES - PRECISION GRAOE
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Kontes Pipettes are calibrated with extreme care. Tips are gradually tapered for correct orifice dimensions and effluent time for each size. Extreme tip Is finely ground at right angles to pipette center line, then beveled. Durable borosilicate glass is used.
CAPACITY IN m l .
Ω KONTES GLASS
COMPANY
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J U N E
9,
1958
C & E N
8 5
M ET A LΑ Β ; PROGRESS1 IS MADE IN METAIAB EQUIPPED LABORATORIES
History sho vs that a lack of laboratoryfacilities hi While scientific theories are essential, • there-is no substitute for actual labora tory research and experimentation. Meta lab manufactures a complete line of METAL; or WOOD i'aboratory.equipment including: chemical fume hoods, and fume hoods, for radioactive 'materials, storage cabinets and cases, center arid wall tables, sinks, and specialized units, for any requirements yotnmay-have for your laboratory.
Write f o r i n f o r m a t i o n a b o u t o u r l a b b r a t o r y e n g i n e e r i n g a n d p l a n n i n g service. Also—send f o r 180-page Catalog 5 B or S u p p l e m e n t 55A.
DIVISION
O F Ν OR B U T Ε
CORPORATION·
220 Duffy Avenue, Hicksville, L. I., New York
re f i n i n g
prod ucts T h e facilities a n d e x p e r i e n c e of T r u l a n d m a y b e e m p l o y e d ad vantageously for t h e economical u p g r a d i n g a n d disposal of sol vent mixtures a n d organic by products. O u r technically t r a i n e d personnel a r e available to discuss t h e refining of a n y solvent mixture or organic by-product.
Send for new booklet which describes our operation. TRULAND CHEMICAL EAST RUTHERFORD, Division
86
of The T r u b e k
C&EN
COMPANY
NEW JERSEY Laboratories
J U N E 9, 1958
INTERNATIONAL of more developed countries have been introduced into Canada. O n the other hand, foreign control over t h e policies of Canadian subsidiaries, particularly in manufacturing, can restrict the scope of innovation b y the Canadian estab lishment. Similar limitations may occur in other relations between parent com panies and subsidiaries. A recent in stance concerns the proposed sale abroad of a Candian-made product; United States foreign policy was in voked by trie parent company and the order ^vas n o t filled. In many cases, foreign investment in Canadian industry is undertaken to provide for participation in the Cana dian market, either domestic or export, when advantage can b e taken of tariff preferences for Canadian-made goods among countries of t h e British Com monwealth. Also, geographical reasons alone sometimes warrant establishing a subsidiary plant close to its natural mar ket. Conversely, Canadian subsidiaries have been established to provide a wholly-owned source of r a w materials for a parent company. Here, the policy and lines of development of the sub sidiary and of its potential markets are likely t o b e closely controlled by the parent. • St. l a w r e n c e Corp. of Newfound land o f St. Lawrence, Nfld., and Hunt i n g d o n Fluorspar Mines of λ Ian doc, Ont., want tariff protection in Canada on fluorspar at the rate of $10 a ton. Fluorspar, used in making aluminum, industrial acids, and other chemicals, now enters Canada duty free. Both firms say t h a t Canadian producers can not match prices of fluorspar coming from Mexico, Spain, Italy, and Ger many hecause of higber wage rates in Canada. • Lu m mus C o . C a n a d a , L t d · , w i l l b u i l d
a 25,000 barrel-per-day refinery at Ville d'Anjou near Montreal, Canada, for B P Canada, Ltd. Completion is planned for mid 1960. • Industrial
Quimica
Pennsalt, S . Α . ,
supervised by Pennsalt International, has dedicated its n e w chlorine-caustic plant in Mexico. T h e plant, operated by Mexicans, uses DeNora mercury cells and h a s a rated capacity of 35 tons per day. Besides chlorine, the plant makes rayon-grade sodium hydroxide, sodium hypochlorite, and hydrochloric acid.
