ABSTRACT
This chapter discusses Canadian auto sector, to illustrate how and why certain industries determined their choice of location and their level of competitiveness. It explains the emergence of the Canadian automotive cluster primarily as a consequence of industry factors, namely the proximity of the United States sector resulting in the emergence of the Canadian sector in the shape that it eventually took. The chapter also explains the emergence of formal continentalization of the industry after 1965. It addresses the impact that this continentalization had upon the sector's structure and competitiveness within North America. The chapter examines Magna International as a case study of the development of the Canadian parts sector, and looks at how continentalization shaped inward foreign direct investment (FDI) from Japan. Ultimately, the two most important factors in shaping the Canadian industry was access to markets and FDI.
