Foreign direct investment is necessary to hit Canada's ambitious export goals: economist

There are many who likely bristle at the thought of a foreign country investing in Canada, perhaps because most equate “investment” with “land buying.” But when we’re talking foreign direct investment, in this case, we’re talking about companies investing in Canadian businesses, and vice versa.

And, as J.P. Gervais, chief agricultural economist with Farm Credit Canada, explains, there are several good reasons why fostering foreign investment is so important, not the least of which is the development of trade relationships and growth of export markets.

“(Canada) is the fifth largest exporter of agriculture commodities in the world and we want to jump to number three; we’re the eleventh largest in food exports and we want to jump to number five. We need to leap frog a bunch of countries (to get there),” Gervais says, in the audio below.

How do we get there? Investment in our own processing capacity and our own markets absolutely makes sense, but we work in a global marketplace — and businesses want to invest in Canada. That investment spurs trade, with a more loyal buyer/seller relationship.

It’s interesting, he says, to look at the statistics on not just total foreign direct investment in Canada, but also where that money is coming from. Perhaps a natural progression, but the biggest players investing in Canada’s ag and food sector is no longer the U.S., but Europe; China has also become a major player in the last decade.

Ultimately, the goals of increased exports and more domestic processing don’t have to be in direct opposition, Gervais says, but it will take a willingness to welcome that outside investment to grow Canada’s production and processing to meet our lofty targets.

Gervais spoke more in-depth on the give and take of foreign direct investment on Friday’s edition of RealAg Radio. Listen below for the segment:

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