The High Price of Canadian Economic Sovereignty

A truck carries a container near a cargo ship at the Port of Vancouver on Aug. 3, 2025. Chris Helgren/Reuters

Commentary

Who doesn’t want their country to be more self-reliant?

It’s an appealing idea. We teach our children to become independent adults. We admire people who can stand on their own two feet. Nations, naturally, want the freedom to chart their own course without being pushed around by others.

This is why the phrase “economic sovereignty” has become so popular. It promises a nation that makes more of what it needs, depends less on foreign suppliers, creates more domestic jobs, and is better prepared for global crises. After everything we have experienced over the past few years, who could argue with that?

But the truth is that economists have been wrestling with this same issue for centuries. Their conclusion is not that self-reliance is undesirable. Rather, they warn that there is an important difference between becoming more resilient and trying to become totally self-sufficient. One strengthens a country. The other can gradually make it poorer.

Simple Reasoning

Imagine a family determined never to depend on anyone else. They decide to grow all their own food, sew their own clothes, repair their own vehicles, build their own furniture and generate all their own electricity. They would certainly become more self-sufficient. But they would also become exhausted and considerably poorer.

Growth and prosperity have always come from specialization and exchange. A carpenter hires an accountant. The accountant visits a doctor. The doctor buys food from farmers.

Everyone concentrates on what they do best, and everyone becomes better off as a result.

Economists have long argued that the same principle applies to nation states. Canada has enormous strengths in agriculture, mining, forestry, energy, financial services, and a number of advanced technologies. Other countries excel in different industries.

Trade allows each nation to specialize in those areas where it has a comparative advantage while purchasing other products from countries that can produce them more efficiently. This simple idea has helped make the modern world more prosperous than previous generations could have imagined.

This involves more than buying and selling goods. It also involves the movement of ideas, talent and investment. In the past, Canadians understood this. When an international company chose to build a factory in Ontario, develop a mine in Saskatchewan, or establish a research facility in Alberta, governments generally welcomed the investment. It meant construction jobs, permanent employment, new technologies, tax revenue, and opportunities for Canadian suppliers.

In more recent times, foreign investment itself has been viewed with suspicion. The concern is understandable. If a foreign company owns a Canadian business, some of the profits will flow back to shareholders elsewhere. Some argue that Canada risks becoming little more than a “branch plant” economy—providing the land, the workers and the electricity while others collect the financial rewards. At first hearing, this sounds persuasive. Shouldn’t Canadians own most of Canada’s economy?

A Thought Experiment

Imagine two neighbouring communities, each with empty industrial spaces. One community decides that only locally owned businesses may build there. A handful eventually do. The other community welcomes investment from anywhere in the world, provided companies behave responsibly, obey the law, pay taxes, hire local worker,s and respect environmental standards.

Within a few years, research laboratories, manufacturing plants, and data centres begin to appear. Local contractors are busy. Restaurants and hotels thrive. People can afford to build homes. Municipal tax revenues grow. Thousands of local citizens have good-paying jobs. The new businesses may not all be locally owned. But the prosperity is unmistakable.

This is the compelling reality explained recently by Sean Speer and Charles Lammam in The Hub. They argue that an increasing number of policymakers have wrongly begun to view foreign investment as something to be controlled rather than encouraged. Instead of asking how Canada can attract more global capital, they increasingly ask how Canadians can own more of the investment themselves.

This way of thinking presently dominates federal policy. Ottawa’s recently released Artificial Intelligence Strategy emphasizes the creation of “sovereign compute” capacity under Canadian ownership and Canadian control. Other organizations argue governments should use subsidies, procurement policies, and ownership preferences to favour domestic firms over foreign competitors. Speer and Lammam call this philosophy “sovereignty economics.” Its central assumption is simple: Canadian ownership matters more than attracting productive businesses.

But what if we are looking for economic development in the wrong places? Canada did not become prosperous by trying to own every important industry. We became one of the world’s wealthiest countries because we welcomed capital, entrepreneurs, skilled immigrants, and investment from America and around the globe. At the same time, we sold our own products and strengths into international markets.

Foreign investment did not simply enrich foreign shareholders. It financed mines in Northern Ontario, energy projects in Alberta, manufacturing plants across southern Ontario, telecommunications networks, office towers, and research facilities from coast to coast. It created jobs for Canadian workers, contracts for Canadian suppliers, business for Canadian communities and tax revenues that support Canadian public services.

The more useful question is not simply, “Who owns the company?” It is, “Does this investment make Canadians more productive and more prosperous?”

Speer and Lammam make an important observation. Canada spends an enormous amount of time worrying about how to create the next Shopify or the next globally successful Canadian technology company. But an even larger prize may lie elsewhere.

The authors ask the question: How do we help hundreds of thousands of Canadian businesses make better use of the world’s best technologies, no matter where they originate? A manufacturer in Windsor becomes more competitive whether its artificial intelligence software comes from Toronto, California, or Sweden. A farmer in Saskatchewan benefits from precision agriculture regardless of who owns the software company.

A hospital improves patient care by adopting the best available technology—not necessarily the technology with the highest percentage of Canadian shareholders. Economic progress depends less on where ideas originate than on how effectively they are used.

This leads to a different view of economic sovereignty. Instead of trying to own everything ourselves, Canada could aspire to become the world’s most attractive place for trusted international investors to invest, innovate, and build. We already possess extraordinary advantages: abundant energy, a cool climate well suited to data centres, vast amounts of available land, respected legal institutions, capable workers, and proximity to North American markets.

Rather than spending billions of taxpayer dollars attempting to recreate industries that already exist elsewhere, Canada could concentrate on satisfying the conditions that attract investment—competitive taxes, predictable regulations, right-to-work legislation, faster project approvals, open competition, and a climate that rewards innovation.

A Canadian government with more business-friendly policies could help attract billions of investment dollars from companies that struggle to make a profit in over-taxed and over-regulated progressive American states.

Hosting Productive Industries

Ironically, Speer and Lammam’s approach could strengthen Canada’s economic sovereignty more than the nationalist policies pursued in its name. A country that attracts international investors, hosts critical infrastructure, and becomes indispensable to world commerce possesses influence that cannot easily be ignored.

None of this should imply that every foreign investor be treated alike. Canada has legitimate national security interests and should be wary of investment originating from hostile or totalitarian regimes that do not play by the rules of free societies. The objective is to attract productive investment from trusted partners such as the United States, Europe, and Japan—not to carve out a place in Canada for the Chinese Communist Party.

In the 21st century, hosting productive industries may prove more valuable than struggling to develop them. Canada’s future prosperity could depend less on owning every important technology than on becoming the best place in the world to build it, deploy it, and use it.

Real sovereignty is not necessarily measured by the number of corporate share certificates that are held within our borders. It is measured by whether Canada is the place where the world’s brightest minds want to work, where trusted investors want to commit their capital, where innovators want to build their businesses, and where new technologies improve the prosperity of everyone.

Achieving such conditions would not diminish Canadian sovereignty. It would enlarge it.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.