Canada ranked a 'top 3' target for foreign direct investment in 2016

Canada climbed from fourth to third place in A.T. Kearney's Foreign Direct Investment (FDI) Confidence Index, a survey of the world's most attractive destinations for foreign investment. Established in 1998, A.T. Kearney's annual FDI Confidence Index is a forward-looking survey of international business leaders on where they plan to invest and why.

In 2015, North America (the United States and Canada) saw the highest growth in FDI inflows, with FDI rising by an estimated 194 per cent.

Global executives look to North America for safe investment opportunities

This year's report found decision makers continue to seek safer investments in North America and Europe amid lingering uncertainty in many emerging markets. In North America, the United States retained the top spot, while Mexico dropped more than any other country on the list (9 places) to 18th.

Eight of the top 10 ranked investment destinations are occupied by developed markets. In fact, developed markets account for 80% of the top 25 FDI destinations on this year's list, a stark contrast to 2013, when emerging markets accounted for more than 50% and to 2007 and 2010, when emerging markets made up about 70% of the top 25.

Market size, cost of labour and regulatory environment among key FDI decision factors

Global executives told A.T. Kearney that a country's domestic market size, cost of labour and transparency of the regulatory environment are among the most critical factors examined.

Top factors affecting FDI decisions

Here are some of the top-rated factors affecting FDI decisions according to global executives surveyed by A.T. Kearney:

A.T. Kearney also highlights differences among decision makers according to region and sector. For example, Asian executives emphasize the importance of cost of labour and the security environment; North American firms focus more on skilled labour; Europeans pay close attention to the country's market size. Service-sector firms place importance on market size and transparency of government regulations, while industrial firms focus on cost of labour and the security environment. Meanwhile, IT firm executives value technological and innovation capabilities above all other factors, although they also favour labour force talent and R&D capabilities.

Canada improves FDI attractiveness

A.T. Kearney suggests improvements to Canada's regulatory environment have contributed to making Canada an even more attractive destination for foreign direct investment in 2016, with decision-makers taking notice of capabilities in several key sectors including information technology, life sciences, automotive, aerospace and defence and financial services.


May 9, 2016

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