Abstract
This paper reviews trends in inward foreign direct investment (IFDI) and multinational production in Canada, as well as Canada's direct investment abroad, and provides an assessment of their impact on the Canadian economy. It pulls together a large body of existing empirical literature in Canada and other countries on the economic costs and benefits of FDI. The main conclusion of the paper is that both inward and outward FDI provide significant net long-term economic benefits to both home and host countries, provided they maintain competitive and dynamic product and factor markets as well as a competitive business climate. In addition, there is little evidence of a ‘hollowing-out’ of corporate Canada in terms of multinational enterprises operating in Canada moving their corporate headquarters out of the country.
Additional information
Notes on contributors
Someshwar Rao
Dr. Someshwar Rao is the Director of the Productivity and Competitiveness Analysis Directorate at Industry Canada. Dr. Rao is responsible for research and analysis of issues related to productivity, competitiveness, foreign direct investment, domestic and international trade, multinationals, information and communication technologies (ICTs) and the impact of climate change policy on Canadian industries. He was also responsible for Industry Canada's Publications Program. Prior to joining Industry Canada, Dr. Rao was with the Economic Council of Canada, where he played a key role in the preparation of major reports on Canada's competitiveness and the Canada-United States Free Trade Agreement. Dr. Rao also served as the Acting Director of the Canadian Disaggregated Inter-Departmental Econometric (CANDIDE) model group, responsible for the development of a disaggregated model of Canadian industry and policy. He has published extensively on microeconomic and macroeconomic issues.
Malick Souare
Dr. Weimin Wang is a Manager and Senior Research Economist with Human Resources and Skill Development Canada. He also worked at Industry Canada as a coordinator and a senior research economist, and at Statistics Canada as an economist. Mr. Wang's research focuses have included productivity, innovation, economic growth, and foreign direct investment. He has published in peer-reviewed journals, including the Journal of Monetary Economics and the Canadian Journal of Economics. Dr. Wang obtained a Ph.D. in Economics from Canada's Queen's University.
Weimin Wang
Dr. Malick Souare is a Senior Economist in the Economic Research and Policy Analysis Branch at Industry Canada. Dr. Souare received a Bachelor's degree in economics from Université Libre de Bruxelles in Belgium in 1995, a Master's degree in economics from Canada's Université Laval in 1998, and a Ph.D. in Economics from McMaster University, Canada in 2003.