An ICTC Study
A New Partnership with the EU
Published by ICTC, February 2020
Foreign direct investment (FDI) is recognized as a key driver of a country’s economic and productivity growth. It can function to encourage the transfer of technology and expertise, contribute to the spread of best practices in corporate governance and legal traditions, and even play a positive role in international trade. FDI-receiving countries benefit immensely from this type of investment, and FDI-sending countries use it to expand their influence in international markets and promote their products and services.
FDI plays a significant role in the Canadian economy. In 2018, Canada’s inward FDI stock accounted for 52% of total GDP. While slightly lower than the EU average (55%), this was 24% higher than the OECD average and 23% higher than that of the G20. Although historically, FDI in Canada has largely been geared toward primary sectors like oil and gas, in 2018, manufacturing became the most significant sector for foreign direct investment. Notably, these investments were directed at lean manufacturing, clean technologies, as well as chemical and food manufacturing — all areas essential to high-technology sectors like biotech and food tech.
This expanding presence of technology across all sectors of the global economy coupled with mounting trade tensions makes it essential for Canada to focus on attracting high-quality FDI in sectors like ICT, and from jurisdictions such as the European Union. One needs to look no further than the 130% growth in ICT-centred FDI from the EU over the last five years to understand that these businesses have their eyes on Canada. Via interviews with 37 leaders of technology companies in the EU, this study sheds light on how we, as a nation, can leverage and strengthen this critical relationship to drive FDI.
Some key findings include:
- Many ICT-centered EU businesses are not aware of how CETA could benefit them as investors;
- EU businesses expressed a strong interest in CETA’s labour mobility provision; and
- Canada’s strength in the digital-health ecosystem and investments in research and development make life-sciences and digital industries especially attractive for EU investment.
Researched and written by Alexandra Cutean (Senior Director, Research & Policy), Maryna Ivus (Senior Research Analyst) and Zhenzhen Ye (Senior Economist & Data Analyst) with generous support from the ICTC Research & Policy team.