Recent Decisions under the Investment Canada Act: Is Canada Changing its Stance on Foreign Direct Investment?

Collins, Simone | January 1, 2011

With the globalization of the world’s economy, countries have relied heavily on foreign direct investment within their borders to spur domestic economic growth and compete in the global marketplace. Canada, historically a leading destination for foreign investors, has seen its share of global foreign direct investment decline steadily over the past several decades. Most recently, Canada has made waves in the global community by taking positive actions to interfere with foreign acquisitions of Canadian entities, despite the Canadian government’s declarations to global competitors advocating free market principles and denouncing protectionist policies. This article discusses Canada’s procedures governing foreign direct investment within its borders and examines the Canadian government’s recent foreign direct investment decisions and their potential negative implications on Canada’s position in the global marketplace. Given the benefits of foreign direct investment, this article argues that Canada needs to improve transparency regarding its decisions on foreign direct investment to alleviate global concerns of increasing government interference with foreign investors seeking to enter the Canadian economy. Additionally, the article argues that Canada should establish clearer metrics for its review of foreign direct investment to ensure that Canada maintains credibility in the global community as a leading destination for foreign investment opportunities.