Foreign ownership is a hot topic in Ottawa these days because of controversy over non-Canadian investment in the telecom sector. The relaxation of barriers to international money has some Canadian nationalists aroused, but Stephen Gordon, an economics professor at Laval, says the worries are misplaced. He cites a 2005 study by Statistics Canada that finds foreign-controlled plants are more productive, innovative and advanced than domestic-controlled operations.
Gordon, who co-produces the always fascinating Worthwhile Canadian Initiative blog, quotes from a lecture by Dan Trefler of the Rotman School of Business that finds Canadian managers consistently put less weight on education than U.S. managers do. Fewer than one in three Canadian managers have a university degree while almost half of U.S. managers do.
All of this suggests that a dose of foreign management may be just what’s needed to get full value out of Canadian assets. But before we drop barriers, we may want to ask some further questions. For instance, Canada’s current account performance has been far better than that of the United States over the past few years. If U.S. managers are that much brighter and better educated, why can’t they produce a reliable trade surplus for their own country? And why, if U.S. managers are so superb, are Americans suffering 10% unemployment and the worst downturn since the Great Depression while Canada has fared considerably better?
Freelance business journalist Ian McGugan blogs for the Financial Post