Indicators and targets: Global investment

 Jobs and innovation: Tracking progress and results

Targets

  • Double research and development (R&D) investment by foreign controlled global firms in Canada to $12 billion by 2025

Foreign direct investment (FDI) stimulates the economy, improves productivity and spurs innovation by providing Canadian companies with capital, knowledge and technologies. Canada was the second largest recipient of per capita inflows and had the highest FDI stock-to-GDP ratio among G20 countries from 2008-2017 (United Nations Conference on Trade and Development, 2018).

Net FDI flows into Canada is at its highest rate since 2015 and increased substantially from $32.2 billion in 2017 to $54.7 billion in 2018, reversing the downward trend seen since 2013. (Figure 13.1). Canada saw investments in digital industries such as artificial intelligence, cyber security and fintech, as well as natural resources and infrastructure (Statistics Canada, 2018). Overall, the stock of foreign direct investment in Canada rose 5% to $877 billion in 2018.

Figure 13.1: Net foreign direct investment flows into Canada, billion $

Text version
Year Net foreign direct investment flows into Canada, $ Billion
2011 $39.25
2012 $43.07
2013 $71.45
2014 $65.18
2015 $56.07
2016 $47.70
2017 $32.22
2018 $54.73

Source:

Statistics Canada Table 36-10-0008-01 and Table 36-10-0025-01

FDI can also spur research and development (R&D) expenditures in Canada. Foreign-owned companies spent $6.8 billion on R&D in Canada in 2016, which represents more than one-third of total R&D activity in Canada (Figure 13.2).

Figure 13.2: Spending on R&D by foreign-owned companies

Text version
Year US Europe Other Total
2011 $3.1 $3.0 $0.1 $6.2
2012 $3.1 $2.8 $0.1 $6.0
2013 $3.0 $2.7 $0.1 $5.9
2014 $3.2 $3.0 $0.1 $6.3
2015 $3.7 $2.5 $0.1 $6.3
2016 $4.0 $2.6 $0.2 $6.8

Sources:

Statistics Canada, Table 36-10-0445-01

FDI facilitates the sale of Canadian products and services abroad through foreign affiliates. This is particularly important for Canadian small and medium-sized enterprises (SMEs), who are more likely to make international sales through their foreign affiliates than through direct exports (Statistics Canada, 2019). In 2017, Canadian businesses made $320 billion in sales through foreign affiliates, compared with $124 thorough direct exports (ibid.).

Over the last four years, Trade Commissioner Services has facilitated 479 investment projects representing an estimated $49 billion and over 24,500 jobs.