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Foreign Investment Increases in Canada

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Foreign Investment Increases in Canada

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In 2007, foreign direct investment in Canada reached $514.5 billion, an increase of 14.4% over 2006, and the most in eight years. Statistics Canada called the buyouts a “wave of takeovers.”

The increase in direct investment, which occurs when an investor buys out at least 10% of voting equity in a foreign enterprise, centered mainly on the resource sector, such as oil and gas, which is booming in Western Canada.

However, during 2007, Canada’s net direct investment abroad was slightly down, with key partners such as the United States, France, the United Kingdom, the Netherlands, Switzerland and Japan. Experts blame the $4.3 billion decrease on the appreciating Canadian dollar.

The difference between Canada’s direct investment abroad and foreign direct investment only totaled $13.6 billion—down from $92.2 billion in 2006. This is the lowest surplus since Canada’s direct investment abroad surpassed foreign direct investment in 1997.

While the gains are economically promising for provinces in Western Canada—with the region experiencing booms in economy and population—the manufacturing-heavy provinces of Ontario and Quebec are not faring as well.

Stephen Poloz, chief economist for Export Development Canada (the nation’s federal trade promotion agency), said, “In the turbulent seas of the contemporary economy, Western Canada stands apart as an island of prosperity and growth...So far the region has been spared any direct hits from the struggling American economy, and the global competition that threatens Canada’s manufacturing heartland has generated strong demand for western resources” (Canwest News Service).

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