ABSTRACT
A number of multinational subsidiaries in Canada are starting to do what Canadian economists have long recommended. But the multinationals are not moving toward specialisation because economic theory has finally penetrated. The evolution of world products, accelerated by satellite television and enhanced global communication systems, has lent greater power to global rather than national strategies. Specialisation has emerged as the answer to these changing market forces. Rationalisation-integration occurs when a subsidiary produces a component or product under assignment from the parent for the multinational firm as a whole. Product design and specification are handled by the parent division which is close to the relevant market. The economic thrust of Canadian industry is moving from nationalistic protectionism to international competitiveness through specialization. Productivity, entrepreneur ship, labour negotiations and government policy all need to be reexamined in an international light. For public policy in Canada, specialisation will bring some problems with its benefits.
