Economy being hollowed out by resource selloffs

This is from the Harper Index.

I really don't see the great difference between foreign and Canadian private ownership of resource companies. As Watkins notes at the end many countries have publicly owned resource companies so that profits go direct to the government and they can be part of a national energy policy. We have no national energy policy and are content to let Canadian and foreign companies to reap the profits with Canada only collecting royalties. While Canadian companies may be more inclined to use profits to re-invest in Canada, on the whole they will, as any other private company, invest where they think they will get the greatest returns.

Economy being hollowed out by resource sell-offs, despite PM's jokes - Watkins

Value of US buyouts of CDN companies in first half of '07 more than four times value of CDN buyouts of US firms.

OTTAWA, October 9, 2007 - At his surprise news conference Wednesday, Stephen Harper said Canadians had no cause to fear a "hollowing out" of the Canadian economy through foreign takeovers. He joked that Americans may have cause to complain about Canadian-led buyouts of American companies.

"I think it's probably only a matter of time before we hear the alarms about hollowing out of the American economy by Canada," Harper told reporters. The Globe and Mail reports that statistics indicate his joke "isn't far off the mark."

Economist, author and social activist Mel Watkins disagrees. "According to widely quoted numbers from the investment banking services company Crosby & Co, data for the first half of 2007 show that US companies acquired 61 Canadian companies valued at almost $118 billion Cdn while Canadian companies acquired 159 American companies worth almost $28 billion." [Reports on the third quarter are not yet available.]

"There is a striking disparity between these two flows," writes Watkins. "Harper is living in the past and pretending not to know the real story. The intent to revise Investment Canada procedure so as to preclude Chinese takeover for reasons of national security diverts our attention from where the great majority of the takeovers are coming from and imagines that American companies are in no way involved in the practice of American foreign policy."

Watkins says the recent series of buy-outs of Canadian energy, steel and mining companies show Canada is losing control of key resource industries that have built its economy and that will be coveted as global resource supplies dwindle.

"Rather than worrying about the state-enterprises of other countries, we need to recognize that Canada is the only major producer of oil and gas which does not have a state-owned petroleum company of its own."