Foreign Investment in Canadian Telecom

Canada's Harper government has recently put forward plans for the easing of restriction on foreign investment in the telecommunications industry (valued at $41 billion dollars). The plan has options ranging from limiting foreign investment at 49% to allowing foreign investors to buy Canadian telecom companies with a market share of under 10%. This new move should be applauded in its goal of prodding the economy forward, however this is a situation that must be strictly monitored and tightly regulated.

Foreign investment brings many advantages including augmenting existing domestic investment, the fact that multinational companies will most likely bring a new innovative perspective to revitalize the market (new technologies and management techniques), increasing domestic productivity, stimulating the economy due to more competition, and create many new jobs... in the short term, there are many opportunities.

However, in the long run, the multinational corporation may decide to outsource workers/raw material/technology from cheaper sources, such as their own native country. If they deem the enterprise to be too costly, they may shut down operations in the host country. Profits may flow outwards to foreign owned businesses. And the loudest argument against foreign investment; the loss of domestic control over major investment decisions. As you may see, the main issue is not controlling incoming foreign investment, but regulating outgoing foreign investment.

In the end, I see great opportunity in allowing more foreign investment; however with great opportunity, there is always great risk. If the balance of foreign investment is not maintained, and more of it is leaving the host country, then domestic investment will also plummet. The success of the economy depends on the balance of trade (exports exceeding imports, surplus) and thus also the balance of foreign investment (more is gained than given).

The government must enforce strict antitrust laws, they must regulate the flow of capital and they must grow from "a government that is very committed to market forces" to a government that is a market force.