FDI 101 – What is FDI?
Close to 2.5 million people work for global companies operating in Canada. That means one out of every eight Canadians depends directly on foreign direct investment (FDI) for their livelihood.
But what exactly does FDI mean?
FDI means that a global company, whose headquarters are outside of Canada, invests here in one of these ways:
- A greenfield investment, or new investment, which takes place when a global business sets up in Canada for the first time.
- A reinvestment, which is when a global company expands its existing operations in Canada and opens more facilities.
- Mergers and acquisitions – or M&As – which happen when global investors purchase or partner with a Canadian company to grow their business.
No matter the type of FDI, it brings considerable positive impacts to the Canadian economy by creating opportunities, stimulating development and bringing new ideas and innovation. In 2021, global companies invested $82 billion in 736 projects throughout Canada, a 15-year high.
Furthermore, in 2021 and to date, there has been a trend that most investments are coming from global companies already operating in Canada. That’s good news signaling companies are choosing to reinvest for the long term in Canadian communities.
Why do global companies choose to invest in Canada?
Canada has an excellent investment-value proposition in a range of industries to attract the world’s leading companies. An abundance of talent means that global companies can rely on a skilled workforce in Canada. Ecosystems that drive innovation help fuel growth. Plus, Canada offers stability, which minimizes business risk.
Canada also has unmatched access to world markets through 15 free trade agreements connecting to 1.5 billion consumers.
Furthermore, increasing numbers of global companies share Canada’s commitment to achieving economic sustainability through an emphasis on environmental, social and governance (ESG) investment criteria. Leadership in ESG will become even more important to Canada – and the world – in the coming years.
Foreign direct investment into Canada is vital to our communities. It creates new jobs and opportunities, stimulates economic development, and brings fresh ideas and innovation.
Want to learn more about the basics of FDI? See our articles FDI 101 – How collaboration propels FDI into Canada and FDI 101 – Priority industries for FDI in Canada.