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Foreign control in the Canadian economy

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Foreign acquisitions of Canadian-controlled firms, particularly in manufacturing and oil and gas, drove a 10.6% increase in Canadian assets under foreign control in 2007. Canadian assets under Canadian control rose 9.9%, led by the depository credit intermediation industry.

As a result of these movements, foreign-controlled firms accounted for 21.3% of corporate assets in 2007, up slightly from 21.1% the year before.

In the manufacturing sector, assets under foreign control increased 16.4% in 2007, while those under Canadian control declined 8.2%. In the oil and gas industry, assets under foreign control rose 24.1%, more than double the 10.1% increase in assets under domestic control.

Asset-based measures of foreign control provide a longer-term perspective. However, foreign control is also measured by operating revenues and profits earned by enterprises operating in Canada that are controlled by non-resident or foreign interests.

In 2007, Canadian-controlled firms increased their operating profits by 6.5%, compared with a 1.0% increase for those under foreign control. In terms of revenues, firms under Canadian control recorded a 5.9% increase, almost double the 3.2% growth for foreign-controlled firms.

Consequently, foreign-controlled firms accounted for 26.2% of operating profits, down from 27.2% in 2006. With respect to revenues, foreign-controlled firms represented 29.4% of the total in 2007, down from 30.0% in the previous year.

Manufacturing: Foreign-controlled firms now represent over one-half of assets, revenues and profits

In 2007, foreign-controlled companies operating in Canada held more than half (52.8%) of assets in manufacturing, the first time since 1999. This share was up from 46.8% in 2006. The increase was due largely to foreign acquisitions of Canadian-controlled firms, especially in the primary metals and the wood and paper industries.

Firms under foreign control also accounted for 53.8% of manufacturing revenues and 51.4% of manufacturing profits. Both shares were higher than those in 2006.

All manufacturers recorded a decline in profits in 2007, whether they were foreign-controlled or Canadian-controlled. This decline was due in part to an appreciating Canadian dollar, the softening US housing market, and strengthened global competition.

Oil and gas: Foreign-controlled shares get boost from acquisitions

For a second consecutive year, Canadian-controlled firms accounted for over one-half of assets, revenues and profits in the oil and gas industry in 2007. However, they lost some share to foreign-controlled firms.

The share of assets for domestic-controlled firms in oil and gas fell from 64.3% to 61.5%. While these firms generated 51.2% of operating revenues and 55.4% of profits, both shares were down from their levels in 2006.

Note to readers

Under the authority of the Minister of Industry, Statistics Canada administers the Corporations Returns Act, which requires the collection of financial and ownership information on corporations conducting business in Canada. This information is used to evaluate the extent of non-resident control of the Canadian corporate economy.

The Corporations Returns Act requires that an annual report be submitted to Parliament summarizing the extent to which foreign control is prevalent in Canada. The document being released today is the report for the reference year 2007.

Three components are used to measure foreign control: assets, operating revenues and operating profits.

Asset-based measures of foreign control provide a longer term perspective. Assets are a stock item, reflecting economic decisions and market conditions that evolve more slowly over time.

Revenue-based measures, on the other hand, represent a flow item and are closely tied to the business cycle. Revenues tend to reflect current business conditions, causing them to be more volatile than asset-based measures.

Profits are a measure of the financial health and well-being of an economy and can be used to assess its performance and sustainability.

Like firms in manufacturing, those in the oil and gas industry experienced declining profits in 2007, regardless of whether they were controlled domestically or by foreign countries.

The rising value of the Canadian dollar and lower natural gas prices contributed to lower earnings for both Canadian-controlled and foreign-controlled oil and gas extractors.

Banks: Foreign control is regulated

In the finance and insurance sector, the depository credit intermediation industry, which includes banks, posted the smallest shares under foreign control, at 8.3% of assets, 7.8% of revenues and 6.7% of profits. These shares have remained relatively stable since 1999, reflecting regulations governing foreign control.

United States and United Kingdom firms increase shares on strength of acquisitions

The United States continued to be the dominant player among foreign-controlled enterprises operating in Canada.

In 2007, US-controlled firms accounted for 54.7% of assets under foreign control as well as 59.3% of operating revenues, and 54.4% of profits. These proportions were all up slightly from the year before.

The increase in these shares was driven by acquisitions of firms that were formerly under the control of companies based in the European Union and Canada. This was especially the case in three manufacturing industries: motor vehicles and parts; wood and paper; and primary metals.

The shares of foreign-controlled assets and revenues under the control of firms in the United Kingdom expanded, while those under German control contracted.

The increase in shares controlled by firms in the United Kingdom reflected acquisitions of manufacturing firms formerly under Canadian control.

Germany was the only major foreign country of control whose shares declined significantly. They fell 2.0 percentage points for assets, 2.6 points for revenues and 2.1 points for profits.

This decline in German-controlled shares resulted from takeovers by US-controlled firms in manufacturing.

Available on CANSIM: tables 179-0004 and 179-0005.

Definitions, data sources and methods: survey number 2503.

The report Corporations Returns Act, 2007 (61-220-X, free), is now available from the Key resource module of our website under Publications.

For more information, or to order data, contact Client Services (toll-free 1-888-811-6235; 613-951-2604; To enquire about the concepts, methods or data quality of this release, contact Andrea Farkas (613-951-6909;, Industrial Organization and Finance Division.

Table 1

Growth in total assets, operating revenues and operating profits in Canada
  2006 to 2007
  Assets Operating revenues Operating profits
  annual % growth rate
Under foreign control 10.6 3.2 1.0
Under Canadian control 9.9 5.9 6.5

Table 2

Total assets, operating revenues and operating profits, and shares under foreign control, by industry
  2006 2007 2006 2007
  Total under Canadian and foreign control Under foreign control
  $ millions %
Manufacturing 655,034 676,966 46.8 52.8
Oil and gas extraction and support activities 388,873 447,705 35.7 38.5
Rest of non-financial industries 1,827,608 2,009,717 16.7 15.9
Other financial industries 314,038 347,263 13.7 12.1
Depository credit intermediation 1,952,381 2,181,712 8.0 8.3
Rest of finance and insurance industries 652,035 707,697 42.1 40.0
Total all industries 5,789,970 6,371,059 21.1 21.3
Operating revenues        
Manufacturing 707,659 702,647 51.4 53.8
Oil and gas extraction and support activities 155,311 169,572 48.5 48.8
Rest of non-financial industries 1,851,100 1,966,118 21.5 20.4
Other financial industries 63,373 69,899 13.7 11.3
Depository credit intermediation 111,877 128,114 7.7 7.8
Rest of finance and insurance industries 132,605 138,502 39.3 39.6
Total all industries 3,021,925 3,174,851 30.0 29.4
Operating profits        
Manufacturing 45,510 44,032 50.8 51.4
Oil and gas extraction and support activities 29,181 24,757 40.9 44.6
Rest of non-financial industries 131,682 141,208 18.6 18.2
Other financial industries 22,973 28,424 8.7 11.6
Depository credit intermediation 30,300 34,113 7.5 6.7
Rest of finance and insurance industries 28,188 29,817 51.7 47.8
Total all industries 287,834 302,351 27.2 26.2
Figures may not add up to totals because of rounding.

Table 3

Total assets, operating revenues, and operating profits under foreign control, by major country of control, all industries
  2006 2007 2006 2007 2006 2007
  Assets Operating revenues Operating profits
  $ millions
United States 665,983 740,095 531,617 554,523 41,421 43,050
United Kingdom 154,814 182,033 65,499 78,204 7,791 8,401
Germany 69,388 49,320 55,451 32,626 4,898 3,275
All other foreign countries 334,359 382,767 253,606 269,384 24,259 24,452
Total, under foreign control 1,224,543 1,354,215 906,173 934,736 78,369 79,178
  % under foreign control
United States 54.4 54.7 58.7 59.3 52.9 54.4
United Kingdom 12.6 13.4 7.2 8.4 9.9 10.6
Germany 5.7 3.6 6.1 3.5 6.3 4.1
All other foreign countries 27.3 28.3 28.0 28.8 31.0 30.9
Total, under foreign control 100.0 100.0 100.0 100.0 100.0 100.0
Figures may not add up to totals because of rounding.