Canada Fourth Most Popular Foreign Investment Destination

Results revealed Canada’s ranking increased dramatically.

By: Maureen Lu, Staff Writer

Photo Courtesy of Jay Banks

Canada has moved up 16 spots to become the fourth most favored destination for foreign investors. The A.T. Kearney rankings released on Wednesday put Canada just behind the United States, China and Brazil in attracting inward foreign direct investment (FDI). Behind Canada in the top 10 are India, Australia, Britain, Mexico and Singapore.

After dramatic declines in FDI inflow into Canada in 2008 and 2009, a strong rebound took place in 2011 in both stocks and flows, partially because of the weak performance of the European market and Asian investors looking for new frontlines in which to invest.

Economists expressed concerns over the optimistic figures, because other factors such as corporate restructuring, stabilization and cost reduction within the industry can cause increasing foreign investment, rather than a booming economy. For example, Ireland’s growth in incoming FDI flows was entirely due to equity and debt realignment in the financial sector.

Yet Asian companies have come to Canada for oil and natural resources, and it has changed the game. State-owned enterprises in Asian countries are challenging the traditionally powerful multinational business and joint ventures in the oil industry. Multinational corporations are still powerful in the Canadian energy industry, while state-owned enterprises, especially in Asian countries such as China and Malaysia, are growing. In 2012, China National Offshore Oil Corporation (CNOOC) initiated a US$15.1 billion proposal to takeover Nexen Inc.

Despite the promising market of foreign investment, this issue has been a sensitive topic in Canada for many years. The party crashers, state-owned enterprises from Asia and the Middle East and their many controversial mergers and acquisitions, have made Canadians concerned about the actual situation behind these deals. What is Canada’s national interest with foreign investment? What are the appropriate relations between Canadian industries and the foreign investment?

A possible solution is to establish win-win international trade agreements with partner countries. The Canada-United States Automotive Products Agreement, launched in 1965, is an iconic success and has played a significant role in international trade and investment in Canadian business history. Through removing tariffs on autos and encouraging investment, it has created a world-class automotive industry in Canada.

Ultimately, clear SEO investing guidelines can regulate this incoming FDI and ensure that the right types of investments are occurring in the nation’s best interests.

Maureen Lu is a Chinese-background junior journalist based in Australia. She is currently in Master of Global Media Communications at the University of Melbourne. Her passions include environment problems, international issues and gender equity.