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Investing in Canada

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Canada attracts overseas investors with a stable political environment, a knowledgeable work force and a robust economy. In fact, from 2003 to 2004, foreign direct investment (FDI) in Canada increased by $11.2 billion to $365.7 billion in 2004.

Foreign direct investment can take many forms. A company can acquire assets or establish operations in another country, and then reinvest some of its earnings there.

Classic examples include companies wanting to expand into new markets or to acquire natural resources, such as American fast-food restaurants opening in China, or Canadian companies building mines in Brazil.

Chart: Canada's foreign direct investment positionThe United States, the United Kingdom, France, the Netherlands and Japan accounted for about 88% of foreign direct investment in Canada at the end of 2004. Most of this investment is in the finance and insurance, energy and metallic minerals, machinery and transportation, and retail industries. On average, foreign investments in Canada returned total dividends and earnings of about 7% from 1994 to 2003, some of which has been reinvested in Canada.

Canadians also invest abroad, making $445.1 billion in foreign direct investment in 2004. The top five destinations for Canadian FDI are the United States, the United Kingdom, Barbados, Ireland and Bermuda.

Though 44% of Canadian foreign direct investment is in the United States, this represents the lowest proportion on record. Canadians tend to spread their investments among more countries, particularly those of Western Europe and the Caribbean. Most of our direct investment abroad is in the finance and insurance, energy and metallic minerals, and services and retailing industries.