In a bid to keep car plants and the jobs in Canada, Finance Minister Jim Flaherty announced in the 2014 federal budget that the Automotive Innovation Fund will be expanded by $500 million. In light of this development, the IRPP wishes to highlight the following publication:
Bailouts and Subsidies: The Economics of Assisting the Automotive Sector in Canada Leslie Shiell and Robin Somerville, with commentary by Jim Stanford IRPP Study, March 2012 HTMLPDFNews Release This study explores the economic rationale for industry subsidies and whether they are a cost-effective way to foster economic development in Canada’s auto sector. The authors argue while the 2009 bailout of GM Canada and Chrysler Canada was successful, in the future, requiring wage concessions as a condition for receiving industry subsidies would be a more equitable and cost-effective way to strengthen the auto sector.
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