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The context for planning in Canada : A critique of Canadian political economy perspectives Burgess, William Irvine


The Canadian political economy school has argued since the late 1960s that Canada shares economic and social characteristics with semi-colonial third world countries. Consistent with this 'dependency' influenced assessment of the Canadian social formation it has also usually argued that national economic sovereignty should be a strategic concern in popular and socialist programs. This study critically evaluates this view of the economic and social context for planning interventions in Canada, in particular by examining the main empirical evidence traditionally advanced in its favour, namely the relative extent of foreign economic control in the Canadian economy. The study first reviews the various characterizations of Canada in the political economy literature, with an emphasis on the empirical evidence offered in their support. It then extends and broadens previous examinations of foreign economic control in Canada using recently released Statistics Canada data on foreign control of corporate assets and revenue up to 1992, and by comparing Canada with other OECD countries on the basis of the extent of inward and outward foreign direct investment (FDI). The studies main findings are that: i) The exclusion of the financial industries in most previous discussions of the level of foreign economic control in Canada has resulted in the actual level being overstated - in nominal terms, by about one-quarter; ii) Contrary to dependency influenced predictions of the period, foreign control of the Canadian economy decreased very significantly after the early 1970s, though this declining trend apparently ended and even partially reversed after the mid 1980s. Given the central place of the US in dependency accounts it is notable that the decline in US economic control has been greater than for all foreign control, and does not appear to have recovered in the recent period up to 1992; iii) The dependency influenced categorization of Canada with countries like 'semicolonial' Argentina or even 'peripheral' Spain cannot be sustained when the evidence shows that in absolute, but especially relative terms, Canada ranks as a world leader in the scale of direct investments held in other countries. Canadian FDI in the US has also been growing considerably faster than has US FDI in Canada; iv) The level of foreign economic penetration in Canada is notably higher than most OECD countries. However, when the relative size of the Canadian economy, a 'natural' degree of continental integration and recent trends among other OECD countries are considered, Canada is not as exceptional in this regard as has often been suggested. The study concludes that this evidence indicates that Canada is more accurately conceived of as a major advanced capitalist country than a dependent (if rich) semi-colony, and that planning interventions based on the latter assessment are not only likely to fail, they are a major diversion from the required strategy.

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