Ottawa boasts about large recent inflows of capital but outflows are even bigger. If Canadians prefer to invest elsewhere, that's bad news

According to the OECD, Canada was the third largest recipient of foreign direct investment (FDI) inflows in the first three quarters of 2023 (at US$42 billion), behind only the United States and Brazil. Does that mean Canada is doing well attracting capital, as the federal government has argued? Not really. Not if you consider outflows, too.

Canada has always relied heavily on FDI inflows to grow our economy. At times, we have been uneasy about foreign takeovers of major Canadian companies. But we have benefited from the new technology, management and jobs FDI usually brings. The highest inflow in the past decade and a half (US$69.4 billion) was in 2014 and it was more than any other country received that year except the U.S. and China. The worst year was 2017 when we received only US$22.8 billion and placed 17th of 45 countries. (Note that these numbers are not inflation-adjusted.)

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FDI numbers jump around for good reason. Statistical agencies add up the equity and debt used by non-residents to buy Canadian assets and also include the reinvested profits of foreign-owned companies operating here (exchange rate impacts on earnings are excluded). So the numbers include lumpy greenfield........

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