We read much in the pages of our newspapers and our leading journals about our globalizing economy. Many business people urge Canada to become more global. Others, like No Logo author Naomi Klein, have claimed that globalization does not help Canada.

We have been studying globalization for the last 20 years of our academic careers. For the last 5 years we have focused our attention on debunking some of the key myths which have developed around globalization by studying the hard facts of the topic. We find that there is a lot of rhetoric about globalization, but, at times, precious few facts. In this article we examine some of most important players in Canada’s part in a globalizing economy, namely Canada’s largest multina- tional firms. Our research has examined their activities. We will see that they are not very global at all. As a commentary on the long-term future of Canada and globalization, we will focus in the final section of this article on whether Canada should make globalization a target solely for traditional ”œbusiness” reasons such as profitability or whether the broader vision of well-being for all plays a critical role.

Each year Fortune Magazine ranks the world’s largest multinationals in their annual Fortune 500 list. How does Canada do? In 2001, we were number four, with 16 Canadian-owned multinational enterprises (MNEs) making the world’s top 500. Not bad, but not great. The United States has 169 so, as in most things other than hockey, we pitch up with our usual 10 percent of the US population.

Table 1 (page 45) lists Canada’s 16 multinationals arranged in decreasing order by total sales. Of these multina- tionals, the vast majority, 14, are what we call home-triad based, with over 50 percent of their sales in North America. The triad is a term coined by McKinsey consultant and author Kenchi Ohmae in mid-1980s. It refers to the three regions of the world where the vast majority of the world’s economic activity occurs, Western Europe, Japan and few selected Asian countries, and the United States and Canada. When we say home-triad based we are referring to the home region of the multinational: Europe for P&O or Nokia; Japan and the other key bits of Asia for Hitachi and Sony; or North America for Canadian, American and Mexican multinationals.

So what does this mean? The data in Table 1 show that 14 out of 16 of Canada’s largest multinationals, the heavy hitters if you would, have more than 50 percent of their sales in their home region of North America. None of these Canadian MNEs are ”œglobal.” They do not have important percentages of their revenues coming from all major regions of the world, especially the three triad regions.

At best, two Canadian multinationals are biregional. These are Bombardier and Alcan. Bombardier has over 90 per- cent of its sales in North America and Europe. Even then, with over 50 percent of its sales in North America, it is better classified as a home-based MNE. This leaves Alcan, lonely Alcan, with 41.1 percent of sales in North America and 39.6 percent in Europe as Canada’s only true biregional MNE. None of the Fortune 500 Canadian MNEs have a strong revenue base in all three parts of the triad, let alone other regions of the world. So much for the giant, globe- girdling Canadian multinational.

Let us now turn to the foreign- owned firms in Canada (such as Ford Canada). Unfortunately, we cannot obtain data on the intraregional sales of these subsidiaries of US multinationals. All we know is that Ford Canada has 68 percent of its sales outside of Canada, Pratt and Whitney Canada has 85 per- cent outside Canada and Cargill has 70 percent outside Canada. Most of these sales are to the United States. At the very least the foreign owned firms have a majority of their sales in North America.

The average intraregional sales for Canada’s top 16 multinationals, based on revenues, is 74.1 percent. The com- parable number for the largest 169 US multinationals is 77.3 percent. What can we say then? Canada’s dominant large firms are just as focused on their home NAFTA region as are US ones. Our firms, be they Canadian or foreign owned, with few exceptions, are not in any fun- damental sense very global.

There is a further important impli- cation of this similarity between Canadian and US multinationals. Both sets of firms now inhabit a common North American economic space. The 16 Canadian multinationals and the 169 US multinationals in the top 500 average about 75 percent of all their sales in North America. Both sets of multinationals depend for their success on the North American market; neither set of firms is truly global. Thus, Canadian multina- tionals need to focus on bilateral issues such as access to the US market and NAFTA border security measures, rather than on the WTO and other multilateral agendas. Canada’s business is in bed with the United States, and its interdepend- ence shows no signs of decreasing.

While Canadian multinationals are just as locked into the North American market as are US multina- tionals, there is still a border. This can be a barrier to economic success in terms of political uncertainty. Canadians need to work to achieve bet- ter relations with the United States and to deepen NAFTA. The US multination- als could become allies in this work, since they are just as dependent on the North American region of the triad as are the Canadian multinationals.

The new political reality in the United States is that September 11, 2001 has changed both multilateral and bilat- eral government policy. The priority for the United States is its national security. As Iraq has illustrated, the United States places its unilateral security ahead of the traditional multilateral activities of the United Nations. Canadians may not like this, but they must be realistic about it, and business needs to be responsive to this new reality.

One way to do this is for Canada to link security issues to the economic integration of NAFTA. Canada needs more border measures like the Smart Border declaration and action plan of September 2002. As part of this agree- ment between Prime Minister Chrétien and President Bush, multinational firms like General Motors, Ford and others have assumed responsibility for trans- border shipments. They certify the truck drivers and seal the contents of their containers, thereby gaining faster access through border crossings. Logically, this privatization of national security could be extended to the majority of Canada-US trade, as 90 percent of it is conduct- ed by as few as 50 firms.

The policy logic of this new reality is that Canada can become a true partner and thus an ”œinsider” with the United States. Canadian business already operates on a regional basis; the politics need to be adjusted to catch up with this. One bargaining chip for Canada is energy. Given recent events in the Middle East, the United States will be seeking even greater energy security in the future. Canada needs to seize the initiative by making plans to develop the Alberta Tar Sands and by arranging long-term contracts with US firms for energy supply. Regional politics need to follow from regional economics.

These data on regional economic integration tell us that we should con- tinue to focus our corporate energies and our government policies on ensuring Canada’s access to the vital US market. Simply, without the United States as an open, accessible and free market for Canadians goods and services our eco- nomic goose is cooked! At the same time we should try to hedge our bets by increasing our involvement in the two other regions of the triad economies, Europe and the critical Asian economies. But this will be a long and slow process. China, especially, has the potential to be a major market for key Canadian MNEs such as Bombardier and Nortel. Moreover, this observation has also been made by multinationals in the US, Europe and Japan, and the competition for the potentially huge Chinese market is enormous. But the reality of today’s global economy is that Canada is firmly attached to the US economic engine and will be for decades to come. It is hard to foresee any other scenario.