Jack Mintz: Here’s why investment into Canada isn’t the happy story Ottawa’s telling

Oilsands giants have been moving investments out of Canada; here, a workers' residence in Fort MacMurray stands empty.

It is necessary to clarify that Ottawa tells a story that is not real. And is that investment in Canada is not the happy story that Ottawa tells.

In fact, an alarming fact that must be brought up is that the inflows have decreased since 2013 because the interest of foreign capital in Canada has been drastically reduced.

Now, it is necessary to talk about Invest in Canada is a Canadian government organization that promotes and attracts foreign direct investment in Canada. It was created through the Investment Law in Canada and was launched on March 12, 2018, as a departmental corporation.

Thus, it is well known that Ian MacKay, who is CEO of Invest in Canada, the federal government agency created last year by liberals to promote the idea that Canada is a competitive place for business investment, promotes statistics on the said agency. Even so, that is not the reality.

Stories based on selective statistics

It should be noted that, during the past week, MacKay said that 2018 was a stellar year for foreign direct entries to Canada, where a 60 percent increase was established over 2017. In comparison, he stated that the United States foreign direct investment (FDI) entries fell in 2018.

Even so, everyone knows that stories can easily be created based on selective statistics. As an investment promoter, Invest in Canada has used only the numbers you want to paint an attractive picture. However, there is more to this story than is seen in Mr. MacKay’s eyes. Annual FDI statistics are bulky. They can jump into a large foreign acquisition and then fall sharply after it ends, without telling us that it is useful. That is why looking at trends is much more important than looking at one-year shifts.

Clearly, capital flight is best understood by comparing FDI outflows with entries. And since 2015, there have been more Canadian business capital flying abroad than capital flying to Canada. Even in 2018, when FDI inflows improved, they were still almost $ 20 billion less than exits. Undoubtedly, an important factor has been the decrease in investment in FDI in the resource sector with great capital intensity, which is related both to the fall of commodities and the main regulatory problems for the construction of infrastructure here.

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Source: Jack M. Mintz | Financial Post