Bergsten, C. Fred
October 1974
Foreign Affairs;Oct74, Vol. 53 Issue 1, p135
Academic Journal
Canada will now permit new foreign direct investments only when they bring "significant benefit" to Canada. The determination of "significant benefit" is explicitly to be a policy decision of the cabinet, based on five criteria. The new Canadian policy is only illustrative of one of the basic global trends of the 1970s. Virtually every country in the world which receives direct investment--which means virtually every country in the world, big or small, industrialized or developing, Communist or non-Communist, Left or Right--is levying increasingly stringent requirement on foreign firms. The objective of these policies of host countries is to tilt the benefits brought by multinational companies as far as possible in their favor and to minimize the costs to them which can be associated with such investments. Host countries are adopting a variety of strategies to achieve this objective. Most are applying much more sensible general economic policies, and thus removing such sources of windfall profits for the firms--and losses for the countries--as overvalued exchange rates and undervalued interest rates.


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