Skip to main content Accessibility help
×
×
Home

Policy Entrepreneurs and FDI Attraction: Canada’s Auto Industry

  • GREIG MORDUE (a1)
Abstract

New perspective is provided on a critical period in the development of the Canadian automotive industry. In the 1980s, five foreign manufacturers built new vehicle assembly operations in Canada, effectively transforming that country’s automotive industry. Drawing from a combination of interviews with key actors and a review of archives, this case study makes several contributions. First, gaps are closed in the economic history of one of Canada’s most important industries. Second, the case demonstrates the capacity of using historical perspective to extend an existing theory to a new area of inquiry. In this case, Multiple Streams Theory is employed to explain the process of inward FDI attraction. This includes a description of the role of policy entrepreneurs and their capacity to create and exploit opportunities. Third, the case demonstrates the continuing relevance of integrating historical perspective to contemporary issues in business, management, and public policy.

Copyright
References
Hide All
Abernathy, William, Harbour, James, and Henn, Jay. Productivity and Comparative Cost Advantages. Cambridge, MA: Transportation Systems Center, 1981.
Anastakis, Dimitry. Auto Pact: Creating a Borderless North American Auto Industry, 1960–1971. Toronto: University of Toronto Press, 2005.
Anastakis, Dimitry. Autonomous State: The Struggle for a Canadian Car Industry from OPEC to Free Trade. Toronto: University of Toronto Press, 2013.
Beigie, Carl. The Canada-US Automotive Agreement: An Evaluation. Washington, DC: Canadian-American Committee, 1970.
Carlyle, Thomas. On Heroes, Hero-Worship, and the Heroic in History. London: James Fraser, 1841.
Caves, Richard. E. Multinational Enterprise and Economic Analysis. 2nd ed. Cambridge: Cambridge University Press, 1996.
Deigan, Russell. Investing in Canada: The Pursuit and Regulation of Foreign Investment. Scarborough, Ontario: Thomson Professional Publishing Canada, 1991.
Denscombe, Martyn. The Good Research Guide: For Small-Scale Social Research Projects. London: McGraw-Hill Education, 2014.
Dryden, Steve. Trade Warriors–USTR and the American Crusade for Free Trade. New York: Oxford University Press, 1995.
Dunning, John. H. American Investment in British Manufacturing Industry. London: George Allen and Unwin, 1958. Reprint, New York: Anno Press, 1971.
Dunning, John. H. Multinational Enterprises and the Global Economy. Wokingham, UK: Addison-Wesley, 1993.
Gindin, Sam. The Canadian Auto Workers: The Birth and Transformation of a Union. Toronto: James Lorimer and Company Limited, 1995.
Hoekman, Bernard, and Javorcik, Beata Smarzynska. Global Integration and Technology Transfer. Washington, DC: Palgrave Macmillan, 2006.
Hymer, Stephen H. The International Operations of National Firms: A Study of Direct Foreign Investment. Cambridge, MA: MIT Press, 1976.
Iacocca, Lee. Iacocca: An Autobiography. New York: Bantam Books, 1984.
Iacocca, Lee. Talking Straight. New York: Bantam Books. 1988.
Jacobs, A. J. The New Domestic Automakers in the United States and Canada: History, Impacts, and Prospects . Lexington Books, 2015.
Kingdon, John. W. Agendas, Alternatives, and Public Policies. 2nd ed. Boston, MA: Longman, 2011.
Mintrom, Michael. Policy Entrepreneurs and School Choice. Washington, DC: Georgetown University Press, 2000.
Roberts, Nancy Charlotte, and King, Paula. Transforming Public Policy: Dynamics of Policy Entrepreneurship and Innovation . San Francisco: Jossey-Bass, 1996.
Rugman, Alan. Multinationals and Canada-United States Free Trade. Columbia: University of South Carolina Press, 1990.
Shimokawa, Koichi. The Japanese Automobile Industry: A Business History. London: Athalone Press, 1994.
Stake, Robert. The Art of Case Study Research. London: Sage, 1995.
White, Robert. Hard Bargains. Toronto: McClelland and Stewart, 1987.
Williams, Karel, Haslam, Colin, Williams, Job, and Johal, Sukhdev. Cars: Analysis, History, Cases. Oxford: Berghahn Books, 1994.
Yin, R. Case Study Research: Design and Methods. 5th ed. Thousand Oaks, CA: Sage, 2014.
Anastakis, Dimitry. “Industrial Sunrise? The Chrysler Bailout, the State, and the Re-Industrialization of the Canadian Automotive Sector, 1975–1986.” Urban History Review/Revue d’histoire urbaine 35, no. 2 (2007): 3750.
Amuedo-Dorantes, Catalina, Bansak, Cynthia, and Zebedee, Allan A.. “The Impact of Mandated Employment Verification Systems on State-Level Employment by Foreign Affiliates.” Southern Economic Journal 81, no. 4 (2015): 928946.
Birkinshaw, Julian. “Future Directions in International Business Research: The MNE, Subsidiary, and Host Country Agendas.” In The Multinational Subsidiary, edited by Hood, Neil, 301–312. London: Palgrave Macmillan, 2003.
Buckley, Peter J. “Business History and International Business.” Business History 51, no. 3 (2009): 307333.
Caves, Richard E. “Industrial Corporations: The Industrial Economics of Foreign Investment.” Economica 38, (1971): 127.
Caves, Richard E. “Multinational Firms, Competition, and Productivity in Host-Country Markets.” Economica 41, no. 162 (1974): 176193.
Chaminade, Cristina, and Jan, Vang. 2008. Globalisation of Knowledge Production and Regional Innovation Policy: Supporting Specialized Hubs the Bangalore Software Industry. Research Policy 37(10): 16841696.
Christopoulos, Dimitris, and Ingold, Karin. “Exceptional or Just Well Connected? Political Entrepreneurs and Brokers in Policy Making.” European Political Science Review 7, no. 3 (2015): 475498.
Cleave, Evan, Arku, Godwin, and Chatwin, Merlin. “Cities’ Economic Development Efforts in a Changing Global Economy: Content Analysis of Economic Development Plans in Ontario, Canada.” Area 9, no. 3 (2017): 359368.
Clogston, Frankie. “IEDC’s 90th Anniversary.” Economic Development Journal 15, no. 4 (2016): 616.
Cowan, Ralph Klein. “Effects of the United States–Canadian Automotive Agreement on Canada’s Manufacturing, Trade and Price Posture.” PhD diss., University of Michigan, Ann Arbor, 1972.
Crookell, Harold. “The Future of U.S. Direct Investment in Canada.” Business Quarterly 48, no. 2 (1983): 2228.
Desai, Mihir A., Fritz Foley, C., and Hines, James R. Jr.Foreign Direct Investment and Domestic Capital Stock.” American Economic Review Papers and Proceedings 95 (2005): 3338
Du, Luosha, Harrison, Ann, and Jefferson, Gary. “FDI Spillovers and Industrial Policy: The Role of Tariffs and Tax Holidays.” World Development 64, (2014): 366383.
Du, Luosha, Harrison, Ann, and Jefferson, Gary. “Testing for Horizontal and Vertical Foreign Investment Spillovers in China, 1998–2007.” Journal of Asian Economics (2012): 234243.
Dunning, John H. “Reappraising the Eclectic Paradigm in an Age of Alliance Capitalism.” In The Eclectic Paradigm, 111–142. London: Palgrave Macmillan, 2015.
Eisenhardt, Kathleen M.Building Theories from Case Study Research.” In Longitudinal Field Research Methods: Studying Processes of Organizational Change, edited by Van de Ven, A. and Huber, G., 6590. Thousand Oaks, CA: Sage Publications, 1995.
Flynn, David Michael. “The Rationalization of the United States and Canadian Automotive Industry, 1960–1975.” PhD dissertation, Massachusetts Institute of Technology, 1979.
Forsans, Nicolas, and Balasubramanyam, V. N.. “Acquisitions Versus Licensing Agreements as Vehicles for Technology Transfer.” European Journal of International Management 4, no. 1–2 (2010): 4855.
Fuss, Melvyn A., and Waverman, Leonard. “Productivity Growth in the Automobile Industry, 1970–1980: A Comparison of Canada, Japan and the United States.” Cambridge, MA: National Bureau of Economic Research, 1985.
Fuss, Melvyn A., and Leonard, Waverman. “The Canada–US Auto Pact of 1965: An Experiment in Selective Trade Liberalization.” Cambridge, MA: National Bureau of Economic Research, 1986.
Fuss, Melvyn A., and Leonard, Waverman. “The Extent and Sources of Cost and Efficiency Differences Between U.S. and Japanese Producers.” Cambridge, MA: National Bureau of Economic Research, 1986.
Globerman, Steven, and Shapiro, Daniel M.. “The Impact of Government Policies on Foreign Direct Investment: The Canadian Experience.” Journal of International Business Studies 30, no. 3 (1999): 513532.
Goolsbee, Austan D., and Krueger., Alan B.A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler.” Journal of Economic Perspectives 29, no. 2 (2015): 324.
Guimón, José, and Filippov, Sergey. “Competing for High-Quality FDI: Management Challenges for Investment Promotion Agencies.” Institutions and Economies 4, no. 2 (2012): 2544.
Hajzler, Christopher. 2012. “Expropriation of Foreign Direct Investments: Sectoral Patterns from 1993 to 2006.” Review of World Economics 148, no. 1 (2012): 119149.
Harris, Richard, and Robinson, Catherine. “Foreign Ownership and Productivity in the United Kingdom: Estimates for U.K. Manufacturing Using the ARD.” Review of Industrial Organization 22, no. 3 (2003): 207223.
Jenkins-Smith, Hank C., and Sabatier, Paul A.. “The Dynamics of Policy-Oriented Learning.” Policy Change and Learning: An Advocacy Coalition Approach (1993): 4156.
Jones, Geoffrey, and Pitelis, Christos. “Entrepreneurial Imagination and a Demand and Supply-Side Perspective on the MNE and Cross-Border Organization.” Journal of International Management 21, no. 4 (2015): 309321.
Kobrin, Stephen J.Political Risk: A Review and Reconsideration.” Journal of International Business Studies 10, no. 1 (1979): 6780.
Lazzarini, Sergio G. “Strategizing by the Government: Can Industrial Policy Create Firm-Level Competitive Advantage?Strategic Management Journal 36, no. 1 (2015): 97112.
Li, Quan, and Resnick, Adam. “Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries.” International Organization 57, (2003): 175211.
Loewendahl, Henry. “A Framework for FDI Promotion.’ Transnational Corporations 10, no. 1 (2001): 142.
Marangos, John. “The 2018 Clarence Ayres Scholar: An Institutional Riposte to the ‘After the Washington Consensus.’” Journal of Economic Issues 52, no. 2 (2018): 323335.
Markusen, James R., and Venables, Anthony J.. “Foreign Direct Investment as a Catalyst for Industrial Development.” European Economic Review 43 (1999): 335356.
Merz, Julia, Overesch, Michael, and Wamser, Georg. “The Location of Financial Sector FDI: Tax and Regulation Policy.” Journal of Banking and Finance 78, (2017): 1426.
Mintrom, Michael, and Norman, Phillipa. “Policy Entrepreneurship and Policy Change. Policy Studies Journal 37, no. 4 (2009): 649667.
Mordue, Greig. Review of Auto Pact: Creating a Borderless North American Auto Industry, 1960–1971, by Dimitry Anastakis.” Enterprise & Society 8, no. 2 (2007): 451453.
Munck, Ronald. “Critical Development Theory: Results and Prospects.” In The Essential Guide to Critical Development Studies , edited by Veltmeyer, H. and Bowles, P., 71–80. London: Routledge, 2018.
Peneder, Michael. “Competitiveness and Industrial Policy: From Rationalities of Failure Towards the Ability to Evolve.” Cambridge Journal of Economics 41, no. 3 (2016): 829858.
Perchard, Andrew, MacKenzie, Niall G., Decker, Stephanie, and Favero, Giovanni. “Clio in the Business School: Historical Approaches in Strategy, International Business and Entrepreneurship.” Business History 59, no. 6 (2017): 904927.
Pringsheim, Klaus H. “The Car Wars Between Canada and Japan.” Toronto: University of Toronto–York University Joint Centre on Modern East Asia, Founders College, York University, 1983.
Rachwal, T., and Wiedermann, K.. “Multiplier Effects in Regional Development: The Case of the Motor Vehicle Industry in Silesian Voivodeship (Poland).” Quaestiones Geographicae, no. 1 (2008): 6780.
Rugman, Alan. “Canada: FIRA Updated.” Journal of World Trade Law 17, no. 4 (July/August 1983): 352355.
Rutherford, T. D., Murray, G., Almond, P., and Pelard, M.. “State Accumulation Projects and Inward Investment Regimes Strategies.” Regional Studies 52, no. 4 (2018): 572584.
Smith, F. A.The Automotive Industry Meets its Biggest Challenge.” In The Empire Club of Canada Speeches 1980–81, 145–159. Toronto: The Empire Club Foundation, 1981.
Staats, Joseph L., and Biglaiser, Glen. “Foreign Direct Investment in Latin America: The Importance of Judicial Strength and Rule of Law.” International Studies Quarterly 6, no. 1 (2012): 193202.
Taabazuing, Maxwell, Arku, Godwin, and Mkandawire, Paul. “Economic Development Approaches in a Changing Global Economy: What Do Practitioners Think?Urban Research & Practice 8, no. 2 (2015): 145164.
Tsang, Eric W. “Generalizing from Research Findings: The Merits of Case Studies. International Journal of Management Reviews 16, no. 4 (2014): 369383.
Wonnacott, Paul. “Canadian Automotive Protection: Content Provisions, the Bladen Plan, and Recent Tariff Changes.” Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique 31, no. 1 (1965): 98116.
Wonnacott, Paul, and Wonnacott, Ronald. “The Automotive Agreement of 1965.” Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique 33, no. 2 (1967): 269284.
Yanarella, Ernest J., and Green, William C.. “Canadian Recruitment of East Asian Automobile Transplants: Cultural, Economic and Political Perspectives.: Canadian Journal of Sociology 18, no. 4 (1993): 359382.
Zhang, Lei, Henry, Kinnucan, and Gao, Jing. “The Economic Contribution of Alabama’s Automotive Industry to Its Regional Economy: Evidence from a Computable General Equilibrium Analysis.” Economic Development Quarterly 30, no. 4 (2016): 295315.
Antweiler, Werner. Foreign Currency Units per 1 US Dollar, 1948–2007. Vancouver: University of British Columbia. http://fx.sauder.ubc.ca/etc/USDpages.pdf.
Canada, Department of Industry, Science and Technology. Report on the Canadian Automotive Industry in 1985. Ottawa: Government of Canada, 1987.
Canada, Department of Industry, Science and Technology. Report on the Canadian Automotive Industry in 1986 . Ottawa: Government of Canada, 1988.
Canada, Department of Regional and Industrial Expansion. 1983 Report on the Canadian Automotive Industry. Ottawa: Government of Canada, 1984.
Canada, Minister of Supply and Service. The Canadian Automotive Industry: Performance and Proposals for Progress, Royal Commission on the Automotive Industry. Ottawa: Queen’s Printer, 1978.
Cohen, Stephen. “The Route to Japan’s Voluntary Export Restraints on Automobiles: An Analysis of the U.S. Government’s Decision-Making Process in 1981.” In Proceeding of the Conference on Power and Prosperity: Linkages between Security and Economics in U.S.–Japanese Relations Since 1960, March 14–16, 1997. La Jolla, CA: National Security Archive and The Institute on Global Conflict and Cooperation, Institute of the Americas, 2000.
Crandall, Robert W. “The Effects of U.S. Trade Protection for Autos and Steel.” Brookings Papers on Economic Activity, Summer, 271–288. Washington, DC: Brookings Institute, 1987.
DesRosiers, Dennis. DesRosiers Automotive Yearbook: 1998 Edition. Toronto: DesRosiers Automotive Consultants, 1999.
Emerson, David. Production, Location, and the Automotive Agreement. Ottawa: Economic Council of Canada, 1975.
Ford Motor Company of Canada. Ford of Canada 1982 Report. Oakville, Ontario: Ford of Canada, 1983.
Japan Automobile Manufacturers Association of Canada. A Short History of the Japanese Automotive Industry in Canada. Toronto: Japan Automobile Manufacturers Association of Canada, 2005.
Japan Automobile Manufacturers Association. The Motor Industry of Japan 2004. Tokyo: Japan Automobile Manufacturers Association, 2004.
Lavelle, Patrick J., and White, Robert. An Automotive Strategy for Canada: Report of the Federal Task Force on the Canadian Motor Vehicle and Automotive Parts Industries to Edward C. Lumley, Minister of Industry, Trade and Commerce and Regional Economic Expansion. Ottawa: Government of Canada, 1983.
MacDonald, Neil B. The Future of the Canadian Automotive Industry in the Context of the North American Industry. Ottawa: Science Council of Canada, 1980.
Mordue, Greig, and Sweeney, Brendan. The Economic Contributions of the Japanese-Brand Automotive Industry to the Canadian Economy, 2001–2016. Toronto: JAMA Canada, 2017.
Motor Vehicle Manufacturers Association of the United States. MVMA Motor Vehicle Facts and Figures ’81 . Detroit, MI: Motor Vehicle Manufacturers Association of the United States, 1982.
United States International Trade Commission. The United States-Canadian Automotive Agreement: Its History, Terms and Impact, Report to the Committee on Finance of the United States Senate on Investigation no. 332-76 Under Section 332 of the Tariff Act of 1930 . Washington: US Government Printing Office, 1976.
White, Robert. “The State of the Automotive Industry in Canada.” In Proceedings of the Conference on Canada’s Future Role in the North American Automotive Industry, Ottawa, 4 October 1983, 49–55. Montreal: The Institute for Research on Public Policy, 1983.
Jiji Press Service
Toronto Star
Maclean’s
New York Times
Globe and Mail
Nihon Keizai Shinbun
Las Vegas Review-Journal
National Library and Archives of Canada, Ottawa, Canada
Archives of Ontario, Toronto, Canada
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Enterprise & Society
  • ISSN: 1467-2227
  • EISSN: 1467-2235
  • URL: /core/journals/enterprise-and-society
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed