Canadian Council of Chief Executives

Innovation and Competitiveness

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Foreign Investment

Future prosperity flows from investments today. Strong inward flows of foreign investment play vital roles not merely in creating new jobs in Canada, but in fostering innovation, boosting productivity and incomes and developing global markets for Canadian-made products.

Canada has made considerable progress both in reducing regulatory restrictions on foreign investment and in creating a more attractive business environment. But to expand investment flows further, additional measures will be needed to reduce the remaining restrictions on investment and create a more competitive tax and regulatory structure.
Canada’s recent poor performance in attracting foreign investment underscores the urgent need to strengthen the country’s productivity and improve the business environment. Foreign direct investment into Canada grew at an average pace of nine percent a year during the 1990s but failed to grow at all in 2003 and rose just 3 per cent in 2004.
The weakness of the Canadian dollar during the early 1990s provided some short-term competitive advantage to existing manufacturers and resource companies, but reduced Canada’s attractiveness as a destination for investment and hurt Canadian-based companies trying to expand through acquisition abroad.
Canada faces a particular challenge in competing for investment within North America. To attract investments serving the North American market, it is not enough to provide an attractive business environment. Canada also must ensure that investors do not perceive the Canada-United States border as a current or potential barrier to the efficient flow of goods and people.
Canada needs to focus on attracting more investment in high-wage operations including research and head office functions serving the continental and global markets.
Healthy investment flows are two-way, and Canadian corporations depend on a strong multilateral framework to give them the confidence needed to invest and to grow globally. Canada therefore must continue to support international rules that encourage investment flows.
In particular, Canada should continue to support inclusion in multilateral agreements of specific mechanisms to increase investor confidence, such as the investor-state dispute resolution process included in Chapter 11 of the North American Free Trade Agreement (NAFTA).


Click for further information:	Home >> Innovation and Competitiveness >> Foreign Investment Foreign Investment Future prosperity flows from investments today. Strong inward flows of foreign investment play vital roles not merely in creating new jobs in Canada, but in fostering innovation, boosting productivity and incomes and developing global markets for Canadian-made products. Canada has made considerable progress both in reducing regulatory restrictions on foreign investment and in creating a more attractive business environment. But to expand investment flows further, additional measures will be needed to reduce the remaining restrictions on investment and create a more competitive tax and regulatory structure. Canada’s recent poor performance in attracting foreign investment underscores the urgent need to strengthen the country’s productivity and improve the business environment. Foreign direct investment into Canada grew at an average pace of nine percent a year during the 1990s but failed to grow at all in 2003 and rose just 3 per cent in 2004. The weakness of the Canadian dollar during the early 1990s provided some short-term competitive advantage to existing manufacturers and resource companies, but reduced Canada’s attractiveness as a destination for investment and hurt Canadian-based companies trying to expand through acquisition abroad. Canada faces a particular challenge in competing for investment within North America. To attract investments serving the North American market, it is not enough to provide an attractive business environment. Canada also must ensure that investors do not perceive the Canada-United States border as a current or potential barrier to the efficient flow of goods and people. Canada needs to focus on attracting more investment in high-wage operations including research and head office functions serving the continental and global markets. Healthy investment flows are two-way, and Canadian corporations depend on a strong multilateral framework to give them the confidence needed to invest and to grow globally. Canada therefore must continue to support international rules that encourage investment flows. In particular, Canada should continue to support inclusion in multilateral agreements of specific mechanisms to increase investor confidence, such as the investor-state dispute resolution process included in Chapter 11 of the North American Free Trade Agreement (NAFTA).
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