CANADIAN INVESTMENT ABROAD BRINGS BENEFITS AT HOME

OTTAWA, Jan. 19 /CNW/ - Canadian companies that invest in other parts of the world are often seen as doing what's best for them, not for Canada. A new Conference Board of Canada study provides a different picture of Canadian direct investment abroad (CDIA): it largely produces productivity, trade and other benefits—both for Canada and its companies.

"The strongest performing Canadian companies use direct investment abroad to improve their performance by accessing new markets, technologies, talents, suppliers, and resources," said Danielle Goldfarb, Associate Director, International Trade and Investment Centre and author of Direct Investment Abroad: A Strategic Tool for Canada (http://www.conferenceboard.ca/e-library/abstract.aspx?did=3958).

"Rather than detracting from Canada's economic activity, the evidence shows that investments abroad translate into overall long term benefits for Canada and its regions."

Direct investment abroad is sometimes characterized as shipping jobs and profits overseas, especially in the United States. The debate has been less intense in Canada compared to south of the border; nevertheless, Canadian politicians have generally avoided openly promoting investment overseas. At the same time, business leaders— particularly in sectors such as financial services and mining —have used CDIA as a strategic tool to their businesses and maintain international competitiveness.

In contrast to the majority of research on the effects of foreign investment —which focuses on the impact of investments into Canada—this Conference Board analysis emphasizes the impact of Canadian investments abroad back in Canada.

The research is based on existing empirical evidence (which is limited) and theoretical analysis on the effects of investing abroad. The evidence indicates that Canadian acquisitions or expansions abroad yield overall benefits for Canada, its provinces, and its cities.

Improvements in productivity, jobs, trade, investment, tax revenues, and worker skill levels are among the benefits, along with the potential for some relief from tight labour markets that constrain Canadian growth.

Not All Investments are Equally Beneficial

While these are the likeliest overall effects, the analysis makes clear that not all investments are alike—and not all are equally beneficial to Canadian companies or to Canada as a whole. If companies go abroad to access new markets or to undertake different activities than those at home, the benefits to Canada are likely to be greatest. However, where activities abroad replace Canadian-based ones—including those mergers or acquisitions where duplicate jobs and activities in Canada are cut—some domestic workers could lose their jobs in the short-term. And, where there is a negative impact on jobs from CDIA, those workers with fewer skills are most likely to have their wages cut or lose their jobs.

Nor Do All Companies Benefit Equally

Moreover, not all companies will benefit equally from going abroad. Companies that are strong performers in Canada are likeliest to benefit from direct investment abroad, whereas struggling companies should stay home - investment abroad is not a panacea for weak performers.

While businesses drive investments abroad, policy-makers have a role to play in facilitating the types of CDIA that will be most beneficial to Canada and its regions. The most important actions for governments are to create a favourable competitive environment in Canada through transparent regulations, competitive tax policies and investment in both education and infrastructure.

Canadian public policies should also eliminate barriers that discourage or penalize firms for investing abroad. For example, Canada should not impose a tax on repatriated profits that have already been taxed in other jurisdictions. Some foreign profits return to Canada in the form of dividends, while other earnings are reinvested elsewhere, generating future wealth for Canadian firms.

The report is published by The Conference Board of Canada's International Trade and Investment Centre (http://www.conferenceboard.ca/ITIC/default.aspx).
The Centre is intended to help Canadian leaders better understand what global economic dynamics —such as global and regional supply chains, barriers to trade, US policies, or tighter border security—could mean for public policies and business strategies.


SOURCE CONFERENCE BOARD OF CANADA

For further information:

Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext.  448
E-mail: corpcomm@conferenceboard.ca

Profil de l'entreprise

CONFERENCE BOARD OF CANADA

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.