cover image: A capital story

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A capital story

12 Aug 2004

The Study in Brief The flow of foreign investment into Canada increased substantially in the latter part of the 1990s as part of a worldwide pattern of unprecedented levels of cross-border investment activity, prompting media stories about a broad-based foreign takeover of Canadian assets and even a book announcing the imminent disappearance of corporate Canada. [...] Deconstructing the Inflow of FDI into Canada Foreign investment in Canada can be classified in three broad categories: • Acquisitions by foreigners of existing Canadian interests; • Reinvested earnings of Canadian affiliates of foreign companies, and 5 The peak in FDI at the worldwide and also at the Canadian level coincided with the sharp equi- ty-price increase of the late 1990s and therefore a [...] The Role of the Exchange Rate Some commentators argue that the main reason for the foreign acquisition of Canadian companies in the late 1990s was the erosion of the Canadian dollar. [...] In a 1996 joint report for Industry Canada and the Department of Foreign Affairs and International Trade, Preston and Saiyed (1996) used the WEFA Canada Macro Economic Model to show how the direct effects of FDI are amplified through the responses from the trade and domestic investment sectors of the economy and through the positive influence of foreign investment on productivity. [...] Then, CDIA as a proportion of Canadian business assets fell in 2003 for the first time in more than 10 years, although much of the decline is nominal rather than real and reflects the substantial appreciation of the Canadian dollar against its U. S. counterpart in that year.17At the end of 2003, the stock of CDIA was $400 billion.
politics economics economy finance foreign direct investment tariff investment international trade business competitiveness debt dividends economic growth exports fdi free trade interest investments mergers and acquisitions withholding tax tax mortgage m&a lending business finance economy, business and finance lenders investments, foreign

Authors

Guillemette, Yvan

ISBN
0888066376
Pages
36
Published in
Canada

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