Minority governments and Canada's confused foreign investment policy

Three case studies demonstrate that federal limits on foreign investment in Canada have been motivated by political not economic considerations. The cases-the abortive 1963 tax on foreign takeovers, the 1973-1974 creation of the Foreign Investment Review Agency, and the 2008 and 2010 decisions to block the purchase of two Canadian companies-shared many features. All three involved minority governments that were vulnerable to shifts in public opinion. All three governments were skeptical about turning away foreign capital. Yet all three undertook measures to limit investment. All three then abandoned the policy as soon as political circumstances changed. This decision-making process helps explain why Canadian foreign investment policy has often been confused and inconsistent.