This FDI Qualities Review of Canada provides an assessment of how foreign direct investment (FDI) contributes to Canada’s sustainable development. The review uses OECD and non-OECD data sources and draws on the qualitative insights from an OECD business consultation on the corporate sustainability practices of a group of domestic and foreign companies operating in Canada. It provides initial policy considerations to improve the impact of FDI on inclusive and sustainable growth in Canada.

Canada must continue pursuing its sustainable development agenda and address pressing challenges, including weak productivity growth, persistent socio-economic inequalities, and the need to reduce net greenhouse gas emissions to zero by 2050, as set out in its ambitious environmental plan. Canada has historically been open to investment and trade. The stock of foreign direct investment (FDI) as a percentage of gross domestic product (GDP), highlighting the economic importance of foreign investment, has increased over time and is higher than that of most other OECD countries. The largest share of FDI is found in services, particularly in the management of companies and enterprises, finance and insurance and trade. Some manufacturing sectors, particularly chemicals, food and beverages, petroleum and coal products), and gas and oil extraction have also received significant foreign investment, particularly in the form of expansions and new establishments of foreign companies (i.e. greenfield FDI). Other sectors such as manufacturing, agriculture, utilities, and construction attract relatively lower levels of FDI in Canada. The majority of greenfield FDI projects are situated in Ontario, Alberta, British Columbia, and Quebec, which are the most densely populated provinces and centres of economic activity.

This chapter provides an overview of Canada’s current state of sustainable development and discusses how FDI can contribute to Canada’s sustainable growth. It provides a summary of key findings from the assessment of the impact of FDI on trade, productivity and innovation; employment, job quality and skills; diversity and inclusion of vulnerable groups; and the transition to a net-zero emissions economy.

This chapter examines the contribution of foreign direct investment to productivity, innovation and the integration of the Canadian economy into global value chains. It analyses productivity differences between foreign and domestic firms and the extent of value chain linkages between foreign multinationals and Canadian firms, an important channel of productivity spillovers. It also assesses the role of foreign firms in innovation and the local capacity of domestic firms, particularly small and medium-sized enterprises to benefit from the diffusion of knowledge and technology brought by FDI.

This chapter examines the contribution of FDI to labour market outcomes in Canada. It assesses the impact of FDI on employment creation and job quality, considering both wage and non-wage working conditions. It also examines how FDI influences skills development and how foreign MNEs address potential skills imbalances, including through their training practices.

This chapter examines the contribution of FDI to the creation of a more diverse and inclusive Canadian workforce, focusing on women, Indigenous peoples, immigrants, and persons with disabilities. The chapter relies on a variety of national and international statistics and on the OECD business consultation on sustainability practices of domestic and foreign firms in Canada.

This chapter examines the contribution of FDI to Canada’s green transition, using project-level FDI data and the OECD business consultation on sustainability practices of domestic and foreign firms in Canada.