View the most recent version.

Executive summary

The share of foreign control in the Canadian economy remained relatively stable in 2005, with foreign-controlled corporations accounting for 29.9% of corporate operating revenues and 21.2% of corporate assets. The share of operating revenue under foreign control has hovered around the 30% mark since 1999.

Canadian-controlled corporations had a slight edge in operating revenue growth in 2005, with a growth rate of 6.9% compared to a 6.1% gain for foreign-controlled corporations. This comes on the heels of a 5.8% increase for Canadian-controlled corporations and a 7.3% increase for foreign-controlled corporations in 2004. Retail and wholesale trade and oil and gas combined contributed almost one half of the increase in operating revenues in 2005.

Canadian-controlled corporations generated almost $2.0 trillion in operating revenue in 2005, just over double the almost $0.9 trillion generated by foreign-controlled corporations.

Corporate assets grew substantially in 2005, rising by 4.9% to $5.2 trillion. This growth was fuelled by both foreign-controlled and Canadian-controlled corporations. Assets of foreign-controlled corporations grew 2.8% to $1.1 trillion, while assets of Canadian-controlled corporations climbed 5.5% to $4.1 trillion, almost four times that of foreign-controlled corporations. This followed even stronger growth rates of 9.4% for Canadian-controlled corporations and 7.2% for foreign-controlled corporations in 2004.

With sky-rocketing fuel prices, oil and gas revenues climbed to $140.4 billion in 2005, up $23.7 billion. Two thirds of that increase came from Canadian-controlled corporations. Oil and gas assets also rose, up $35.6 billion, with the majority of the increase coming from Canadian-controlled producers.

Wholesale and retail trade also saw high growth in 2005. Operating revenues under foreign control in wholesale trade grew by $14.5 billion, compared to $13.4 billion for those under Canadian-control. This raised overall revenues in wholesale trade to $424.1 billion. Operating revenues in retail trade jumped $26.6 billion in 2005 with 90% of that growth coming from Canadian-controlled corporations.

Growth in assets and operating revenue in the finance and insurance industries were highest in the non-depository credit intermediation industry in 2005. Growth rates in operating revenue for Canadian-controlled corporations were 20.6%, compared to 11.8% for foreign-controlled corporations. Much of this growth for the foreign-controlled corporations was concentrated in credit card issuing and sales financing activities, whereas the growth for the Canadian-controlled corporations was in other non-depository credit intermediation activities.

Corporate profits hit a record high of $249.9 billion in 2005. The economy was healthy, particularly in the natural resources sector, as fuel prices pushed oil and gas profits to all-time highs of $29.8 billion and rising mineral prices helped the mining industry raise their profits by almost $700 million to $3.8 billion. This was tempered by a slight dip in manufacturing profits as the stronger Canadian dollar impacted on export sales and the cost of inputs. Canadian-controlled and foreign-controlled corporations contributed in roughly equal measure to this rise in profits in oil and gas, while all of the gain in mining came from Canadian-controlled corporations.

This marked the third straight year that both Canadian-controlled and foreign-controlled corporations saw significant rises in their operating profits. Canadian-controlled corporations led the way in 2005 with a 15.9% boost in profits, while foreign-controlled corporations saw their profits rise by 12.5%. This follows a staggering 22.0% jump in profits by foreign-controlled corporations and a healthy rise in profits of 12.4% for Canadian-controlled corporations in 2004.

In 2005, operating profit margins were at their highest in the last six years. Operating profit margin for foreign-controlled corporations stood at 9.0% in 2005, just above the 8.7% posted by Canadian-controlled corporations. Over the last six years, with the exception of 2002, operating profit margins have been higher for foreign-controlled corporations than for Canadian-controlled corporations.

In the non-financial industries, the United States continued to earn the lion’s share of profits under foreign control in 2005. At $41.0 billion, U.S.-controlled corporations accounted for just over two-thirds of all profits under foreign control in the non-financial industries. U.K.-controlled corporations were next, although well back, earning $4.6 billion worth of profits.

Corporations in the finance and insurance industries earned a record $63.7 billion in profits in 2005, driven primarily by the banking industry ($26.6 billion) and the other financial industries category ($16.4 billion). This marks the third straight year that profits have risen in the finance and insurance industries, after a slight downturn in 2002. Since 2002, growth has been strongest for foreign-controlled corporations as their profits have risen by close to 75%, reaching $16.2 billion in 2005. Canadian-controlled corporations also saw their profits rise, by 60%, over the same three-year time period, reaching $47.5 billion in 2005.