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FDI growth of US MNCs in Canada 1983-2008
Between 1966 and 2008, Canada's share of US FDI fell from 31% to 7%. Although real US FDI stock in Canada increased substantially, it grew at a slower rate in Canada than other countries. Using confidential firm-level panel data from the Bureau of Economic Analysis, we analyze differences in MNC growth between traditional FDI locations of Canada and Europe and nontraditional locations. Our analysis points to several possible explanations for differences in growth. First, relative to Europe, Canada has a smaller proportion of affiliates in service sectors and a higher proportion in slower growth manufacturing industries. Second, we find evidence that Canadian affiliates experienced slower productivity growth than European affiliates. Third, Canada has been less successful than Europe in luring R & D operations. Finally, we find evidence that Canada experienced a negative shock that made it a less attractive location for US FDI growth after 2001. Within Canada, growth of export-intensive affiliates was severely negatively impacted in the post- 2001 years. Furthermore, US MNC parents are significantly less likely to locate new investment in Canada after 2001, but are significantly more likely to locate it in Europe and BRICs. These results are consistent with the tightening of border restrictions after 9/11.
- "Foreign direct investment growth of US multinational corporations in Canada"@en
- "Between 1966 and 2008, Canada's share of US FDI fell from 31% to 7%. Although real US FDI stock in Canada increased substantially, it grew at a slower rate in Canada than other countries. Using confidential firm-level panel data from the Bureau of Economic Analysis, we analyze differences in MNC growth between traditional FDI locations of Canada and Europe and nontraditional locations. Our analysis points to several possible explanations for differences in growth. First, relative to Europe, Canada has a smaller proportion of affiliates in service sectors and a higher proportion in slower growth manufacturing industries. Second, we find evidence that Canadian affiliates experienced slower productivity growth than European affiliates. Third, Canada has been less successful than Europe in luring R & D operations. Finally, we find evidence that Canada experienced a negative shock that made it a less attractive location for US FDI growth after 2001. Within Canada, growth of export-intensive affiliates was severely negatively impacted in the post- 2001 years. Furthermore, US MNC parents are significantly less likely to locate new investment in Canada after 2001, but are significantly more likely to locate it in Europe and BRICs. These results are consistent with the tightening of border restrictions after 9/11."@en
- "FDI growth of US MNCs in Canada 1983-2008"@en