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The Daily

The Daily. Thursday, May 10, 2001

Foreign control in the Canadian economy

1998

Foreign control in the Canadian economy accelerated moderately in 1998, continuing a growth trend that prevailed throughout the 1990s.

Foreign firms controlled 22.7% of assets in Canada in 1998, up a full percentage point from 21.7% in 1999. Foreign ownership of enterprises operating in Canada grew modestly over the five preceding years; it was 20.5% in 1994.

Similarly, foreign firms accounted for 31.7% of all corporate operating revenues, up from 30.4% in 1997, and 29.4% in 1994.

Almost all the increase in foreign control of assets has occurred in the non-financial sector. Foreign firms controlled 26.9% of assets among non-financial industries in 1998, compared with 18.4% in the financial sector. Government regulation is the main reason for continued high level of control by Canadian corporations in the finance and insurance sector.

Of those foreign-controlled assets in the non-financial sector, U.S.-based corporations controlled 69%, and an additional European Union-based firms controlled 18%. Foreign control of assets was greater than 50% in only two industries - chemical, chemical products and textiles, and transportation - both in the non-financial sector. Assets in the remaining industries, including the financial sector, were dominated by Canadian corporations.

In 1998, all of the non-financial industries except chemicals, chemical products and textiles, showed an increase in their level of foreign control of assets due to mergers and acquisitions. Just over 25% of the overall increase was due to assets moving from Canadian to foreign control. The majority of the increase was attributed to expansion or strong performance of existing foreign controlled firms already in Canada.

The largest 25 global enterprises, including Canadian- and foreign-controlled enterprises, possessed 41.2% of all industry assets in 1998. Canadian-controlled firms comprised 36.3% of the assets and foreign-controlled the remaining 4.9%.

Canadian-controlled firms dominated the financial sector. The largest 25 global enterprises in the financial sector, including Canadian- and foreign-controlled enterprises, possessed 71.2% of that sector's total assets in 1998. Canadian-controlled enterprises comprised 68.6% and foreign-controlled enterprises 2.6%.

In the non-financial sector, the largest Canadian-controlled enterprises were not as dominant. The largest 25 global enterprises in the non-financial sector possessed 25.1% of that sector's total assets in 1998, with control more evenly split. Foreign-controlled enterprises comprised 13.6% of the assets and Canadian-controlled, 11.5%.

Available on CANSIM: table 1790001 and matrices 3275-3296.

With the release of CANSIM II, users can now obtain the same data as in CANSIM, but in a table format that is easier to use and more clearly presented.

The report Corporations returns act, 1998 - Foreign control in the Canadian economy (61-220-XPB, $40) will be available soon. See How to order products.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Stewart Taylor (613-951-6564), Industrial Organization and Finance Division.


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