It is not entirely evident who first used the branch plant economy concept; however, it has been extensively used in Canadian and UK literature since the 1970s. This concept broadly describes the negative consequences on the growth of the regions whose economies are primarily composed of branch plants that belong to multi-plant firms. Since the position of branch plants within the command chain is low, the regions that host these branch plants tended to be remotely controlled by the plant headquarters, which are usually located distantly. Authors at that time thought that branch plants might create a short-term boom in the regional economies when initial investments were deployed, or when they performed well owing to external factors such as the sector's expansion (e.g., the growth of the

Petroleum industry in Aberdeen The petroleum industry in Aberdeen began with the discovery of significant oil deposits in the North Sea during the mid-20th century. Aberdeen became the centre of Europe's petroleum industry. With the largest heliport in the world and an import ...

brought a local economic boom). That boom, however, did not sustain itself over the long term. In Scotland, it was mainly Scottish journalists and political readers who warned of the danger of Scotland's dependence on English firms' branches in Scotland. In Canada, an upsurge of Canadian nationalism in the 1960s and early 1970s led the

Liberal Liberal or liberalism may refer to: Politics * a supporter of liberalism ** Liberalism by country * an adherent of a Liberal Party * Liberalism (international relations) * Sexually liberal feminism * Social liberalism Arts, entertainment and m ...

governments of Lester Pearson and Pierre Trudeau to implement policies aimed at regulating foreign investment. The views of

Walter L. Gordon Walter Lockhart Gordon (January 27, 1906 – March 21, 1987) was a Canadian accountant, businessman, politician, and writer. Education Born in Toronto, he was educated at Upper Canada College and the Royal Military College of Canada in Kings ...

were especially influential in the 1960s. Further left,

the Waffle The Waffle (also known as the Movement for an Independent Socialist Canada) was a radical wing of Canada's New Democratic Party (NDP) in the late 1960s and early 1970s. It later transformed into an independent political party, with little elec ...

emerged in the New Democratic Party on a program based on Canadian economic nationalism and independence. These developments led to measures such as the creation of Petro-Canada, a government-owned oil and gas company, implemented by the Trudeau government in the mid-1970s to increase Canadian control over the oil industry. The crown corporation was created as one of the demands of the NDP in exchange for their support of Trudeau's minority government. Trudeau also established the

Foreign Investment Review Agency The Foreign Investment Review Agency (FIRA) was established by the Canadian Parliament in 1973 to ensure that the foreign acquisition and establishment of businesses in Canada was beneficial to the country. The Foreign Investment Review Act that cr ...

to regulate foreign investment in the economy and limit the takeover of Canadian-owned companies by foreign

multinational corporation A multinational company (MNC), also referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation or a stateless corporation with subtle but contrasting senses, i ...

s. The election of Brian Mulroney's Progressive Conservative government in the 1984 election brought this period of

economic nationalism Economic nationalism, also called economic patriotism and economic populism, is an ideology that favors state interventionism over other market mechanisms, with policies such as domestic control of the economy, labor, and capital formation, incl ...

to an end. Mulroney's government dismantled

and moved to privatize Petro-Canada. The Mulroney government's negotiation and implementation of the Canada–US Free Trade Agreement resulted in increased

economic integration Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff and non-tariff restrictions on trade. The trade-stimulation effects intended by means of economic integrati ...

between the US and Canada, and was opposed by economic nationalists in the 1988 election. The Canada–US FTA, the North American Free Trade Agreement and the

World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and ...

may bring branch plants to an end as the elimination of many tariffs and trade controls makes it much easier for a foreign supplier to sell in the Canadian market without having a branch plant in the country. Numerous plants, particularly in the textile and manufacturing sector, have shut down and moved to

Mexico Mexico (Spanish: México), officially the United Mexican States, is a country in the southern portion of North America. It is bordered to the north by the United States; to the south and west by the Pacific Ocean; to the southeast by Guatema ...

or other countries with lower wages and costs of production.

References

{{Economy of Canada footer Canada–United States relations Economic nationalism Economy of Canada Regional economics