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23 Osgoode Hall L. J. 131 (1985)
FIRA: Instrument of Regulation or Vote-Maximization

handle is hein.journals/ohlj23 and id is 141 raw text is: FIRA: INSTRUMENT OF REGULATION OR VOTE-MAXIMIZATION? JACQUES R. PAUWELS* The establishment of the Foreign Investment Review Agency can be explained on the basis that such a screening instrument was the most efficient instru- ment to deal with the problem of foreign direct investment in Canada. However, Jacques Pauwels argues that FIRA was created not for the efficient regulation of foreign direct investment but for political purposes; that is, FIRA provided the Trudeau government with considerable vote-maximizing possibilities. More- over, Pauwels suggests that Mulroney'sintroduction of the Investment Canada Act, replacing FIRA with Investment Canada, can similarly be explained. I. INTRODUCTION The decision to regulate the flow of foreign direct investment (FDI) by means of the Foreign Investment Review Agency (FIRA) undoubtedly ranks among the more controversial policies initiated by the federal government since Pierre Elliott Trudeau became Prime Minister in 1968. On the one hand, proponents of laissez-faire ideas and continentalism opposed any form of FDI regulation from the start; and they continued to condemn FIRA as an obstacle to the free flow of international capital, which impeded Canada's economic growth. Eco- nomic nationalists, on the other hand, originally welcomed the decision to regulate FDI by means of a screening agency, but FIRA was to disappoint their expectations and some nationalists eventually dis- missed the Agency as a useless regulatory paper tiger. The establish- ment of FIRA by the Trudeau Cabinet appears to have been a particu- larly unpopular decision. Why, then, was the decision made to regulate FDI in such a manner? In trying to answer such questions, students of public policy pri- marily use two models (or paradigms) of decision-making in gov- ernment. The first is the technical efficiency or comprehensive ra- tionality model, which postulates that governmental decision-makers select what they believe (not necessarily correctly) to be the most effi- cient instrument available to solve a policy problem (as they define it) and, thus, to serve the public interest. Consequently, when a pol- 0 Copyright, 1985, Jacques R. Pauwels. * Phd in European History at York University. Doctoral candidate in political science at the University of Toronto.

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