Economists had been predicting for some time now that, as many countries stepped up vaccination efforts and relaxed public health restrictions over the course of 2021, economies would come roaring back to life, with significant and positive impacts on the flow of foreign direct investment (FDI).
Yet even with that in mind, the numbers from Statistics Canada recently reported by Invest in Canada are nothing short of spectacular. In 2021, FDI inflows into Canada reached $74.8 billion, their highest mark since 2007 and a whopping 50% above the historical annual average in the decade since 2011. As well, FDI inflows for 2021 were 141% more than in 2020.
Diving into the numbers: Top countries, industries and investment types
Readers won’t be surprised to learn that the United States – Canada’s closest and largest trading partner – was the biggest source of FDI in Q4 2021, contributing $37.6 billion (50% of total FDI inflows).
But we can’t put all our eggs in one basket. Diversifying sources of investment is important to ensure a stable supply of job-creating capital. On that note, it’s encouraging to see the Netherlands (up 148.7%) and the UK (up 105.1%) among the top five sources of FDI into Canada for 2021. Germany displayed the highest growth rates in Q4 2021 FDI flows: 482.9% over its historical quarterly average.
It’s also important to consider “what” global firms are investing in. Manufacturing, outperforming its historical annual average by 51%, held the top spot in 2021. Energy and Mining came in second in absolute numbers and outpaced its historical average by 70%.
There are different types of FDI. The largest portion of FDI by type for 2021 is Reinvested Earnings, meaning companies are reinjecting their capital into the Canadian economy, and signaling their desire to put roots down in Canada.
How FDI supports the Canadian economy
Foreign investment is foundational to the Canadian economy. It helps build a prosperous, sustainable economy for our communities, our country, and our world. FDI creates more innovation, including better ways to combat climate change, and generates more well-paying jobs.
Take, for example, Agrocorp. The Singapore-based company emphasizes local knowledge and crop quality as major reasons why the company chose Moose Jaw and Cut Knife, Saskatchewan to invest $50 million in pulse-processing facilities that not only directly employ Canadians but also create ongoing revenues for local producers.
Beneath the recent dramatic numbers for FDI inflows, a clear and sustained trend has emerged, as more and more companies choose Canada as a destination of choice to invest. Except for the onset of the global pandemic (in 2020), Canada has enjoyed steady year-over-year increases in FDI inflows since 2017 – four of the last five years.
At a time when global efforts to attract investment are seeing uneven results, Invest in Canada and its partners continue to work – and achieve success – in attracting global investors who represent “the best to invest”, companies whose investments benefit our communities and our environment, while also fostering innovation.
To learn more about FDI in Canada, visit our FDI for Canadians page.