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Foreign direct investment (FDI) in Canada

FDI in Figures

According to UNCTAD's 2022 World Investment Report, Canada attracted USD 59.6 billion of FDI in 2021, a 157% increase from 2020, when FDI inflows reached USD 23.1 billion. In the same year, the stock of FDI rose to USD 1,43 billion. According to the latest data from OECD, FDI inflows to Canada increased in the first half of 2022, reaching USD 33 billion, compared to 31.2 in the same period one year earlier. The U.S. and the EU are the main investing partners in Canada: 51.5% of the stock is held by the United States, followed by the UK (6.5%), Switzerland (4.4%), and Japan (4.2%). The Netherlands (3.6%), China (3.1%) and Germany (2.9%) are other major investing countries (by ultimate counterpart – data OECD). Investments are mainly oriented towards finance and insurance (36%), mining and quarrying (21%), manufacturing (19%), wholesale and retail trade (13.2%).

In 2020, the USMCA (Canada-United States-Mexico Agreement, an updated version of NAFTA) came into force, with a potentially decisive impact on the inflows and outflows of investments in Canada, just as the Comprehensive Economic and Trade Agreement (CETA) signed with the EU and currently applied on a provisional basis, as the ratification by the individual EU Member States is still pending. At the same time, Canada enhanced scrutiny of certain foreign investments under the Investment Canada Act (ICA) in sectors related to public health or involved in the supply of critical goods and services. In December 2022 the federal government proposed overhauling foreign investment rules to give the government greater power to scrutinize and potentially block overseas deals that bring national security risks. The proposed amendments to the Investment Canada Act (ICA) include a requirement for foreign investors in some Canadian industries (including sensitive technologies, critical minerals and those dealing with personal information) to notify the government before finalizing deals. This proposal came after Canada ordered three Chinese companies to divest their investments in Canadian critical minerals due to national security concerns. Canada has a favourable business climate; the country ranks 63rd out of 82 countries in the Economist Business Environment ranking and 14th in the World Competitiveness Index published by the International Institute for Management Development (IMD). Some of the strengths of the country are the ease of starting a business and getting credit, a well-educated workforce and good infrastructures, abundant and diversified energy and mineral resources, and a strong banking sector. However, Canada remains heavily dependent on the U.S. (holding almost half of FDI stock and accounting for around two-thirds of the country’s export) and on the fluctuations in international commodity prices, as well as having a high level of household debt.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 26,88465,65952,633
FDI Stock (million USD) 1,184,7751,442,3341,439,848
Number of Greenfield Investments* 324379394
Value of Greenfield Investments (million USD) 17,30723,22820,865

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Canada OECD United States Germany
Index of Transaction Transparency* 8.0 6.5 7.0 5.0
Index of Manager’s Responsibility** 9.0 5.3 9.0 5.0
Index of Shareholders’ Power*** 9.0 7.3 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Canada

Strong Points

Advantages for FDI in Canada:

  • A qualified workforce
  • A welcoming business environment
  • Large reserves of gas, oil and ore
  • A solid banking sector
  • Unparalleled market access (USMCA) and a strong anchor in international trade
  • A dynamic economy, with a market of 38 million consumers
  • Sophisticated infrastructure, as well as a very modern transportation network.
Weak Points

Disadvantages for FDI in Canada:

  • Strong exposure to the United States' economy, namely to exports to the US
  • Sensitivity to international commodity prices and to the government revenues that depend on oil
  • High household debt (186.2% of disposable income)
  • A drop in productivity in manufacturing industry
  • A decrease of the active population due to ageing.
Government Measures to Motivate or Restrict FDI
Canada offers low business taxes for companies and a very good business climate. Total business tax costs are by far the lowest among the G7 countries.
Companies investing in Canada can benefit from a range of incentives and tax credit programmes:

  • Scientific Research & Experimental Development
  • Accelerated Investment Incentive
  • Strategic Innovation Fund
  • Global Skills Strategy
  • Canada’s Pan-Canadian Artificial Intelligence Strategy
  • Innovation Superclusters Initiative

For more information, please visit Invest in Canada, which is Canada’s global investment attraction and promotion agency.
Each Canadian province and territory has agencies dedicated to the promotion of investment which list existing measures.

Bilateral investment conventions signed by Canada
Canada has signed 45 bilateral investment treaties (BITs) with several countries.
To see the conventions, click here.

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Latest Update: September 2023

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