Jack Mintz: Here’s why investment into Canada isn’t the happy story Ottawa’s telling

Financial Post
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It is important to clarify that in fact, the entries have decreased since 2013 because the interest of foreign capital in Canada has been drastically reduced. In this way, it is understood that the clear one is that not everything is as many paints it. Here’s why investment in Canada is not the happy story that Ottawa tells

There are many who have concerns about the statistics lately promoted by Ian MacKay, CEO of Invest in Canada, the federal government agency created last year by the liberals to promote the idea that Canada is a competitive place for business investment. And, last week, MacKay said in a Globe and Mail op-ed that 2018 was a stellar year for direct foreign entries to Canada, with a 60 percent increase over 2017. In comparison, he said the US direct foreign investment (FDI) inflows fell in 2018. It would appear that the US tax reform. Our condolences, President Trump.

Totally different panorama

Clearly, we all know how stories can be created using selective statistics, of course. Now, it is necessary to take into account that Invests in Canada has used only the numbers you want to paint an attractive panorama. However, it is necessary to emphasize that there is undoubtedly more in this story than what is seen in Mr. MacKay’s eyes. And it is that the annual statistics of FDI are bulky. They can jump into a large foreign acquisition and then drop sharply after it ends, without telling us it is useful. That’s why looking at trends is much more important than looking at one-year shifts.

It is noticeable that, according to a table, which was taken from the OECD, FDI in figures, April 2019, with all figures in US dollars, Canadian FDI inflows increased in 2018. Despite this, this was a year absolutely terrible for foreign investment. Likewise, even in 2018, FDI inflows into Canada were still below 2015, which occurred just after the collapse of oil and other Canadian resources. In general, the trend is consistent: FDI inflows have decreased since 2013 because the share of foreign capital in Canada has declined considerably.

Now, it could be said that capital flight is better understood by comparing FDI outflows with inflows. Since 2015, there has been more Canadian business capital flying abroad than capital flying to Canada.

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Source: Jack M. Mintz | Financial Post

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