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HomePolicy Articles Article Summary

A Capital Story: Exploding the Myths Around Foreign Investment in Canada

Commentary by Yvan Guillemette, Jack Mintz

Guillemette and Mintz begin their report by pointing out that the flow of foreign investment into Canada increased substantially in the latter part of the 1990s as part of a worldwide pattern of unprecedented levels of cross-border investment activity. Guillemette and Mintz refer to the media concerns about broad-based foreign takeover and Canadian assets, and argue that those concerns were completely unfounded. They point out that Canadian companies were also actively investing abroad, and that from 1987 to 1998, Canadians made more direct investments abroad than foreigners made in Canada. They argue that Canada is currently a net capital exporter.

In this article, Guillemette and Mintz suggest that cross-border investment activities must be viewed in the context of increasing economic integration between countries. They point to studies that illustrate the positive economic effects associated with both inward and outward direct investment, and argue that foreign direct investment must be encouraged in both directions. They argue that Canada must have internationally competitive policies vis-à-vis trade and investment in order to take full advantage of this worldwide economic integration.

Guillemette and Mintz make a number of recommendations. They point out that Canada has captured a steadily decreasing share of foreign investment dollars directed toward the North American market, and suggest that Canada must liberalize foreign investment restrictions in order to reverse this trend. To improve Canada’s investment attractiveness, they argue that Ottawa should re-examine foreign ownership restrictions, eliminate the Investment Canada Act, eliminate trade irritants, and lower the corporate tax burden.

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Policy Publication Details

Author(s): Yvan Guillemette; Jack Mintz;
Publisher: C.D. Howe Institute [ Visit Website ]
Year Published: 2004; Publisher Type: Research Institute
Publicly Available: Yes Research Focus: International;
Registration Required: No Language: English
Payment Required: No Publication Format: Adobe PDF

Subjects / Categories:

Policy Articles / International Trade, Development & Finance / Foreign Investment
Policy Articles / International Trade, Development & Finance / Foreign Investment / 2004
Policy Articles / International Trade, Development & Finance

Keywords / Tags:

Canada's investment attractiveness; corporate tax; foreign investment regulations; Canadian investment abroad; international competitiveness;