Key Facts about Canada’s Competitiveness for Foreign Direct Investment

November 2019

Highlights

Data updates include new figures for how the Canadian economy will grow in the next year, employment creation, public debt, and access to world markets.

Of particular note:

  • Canada is the best country in the G20 for doing business over 2020-2024.
  • Canada’s average annual GDP growth is forecasted to rank second in the G7 in 2020 at 1.8%.
  • Canada enjoys the lowest net debt-to-GDP ratio in the G7 and its ratio is expected to remain the lowest in 2020 at 26%. 

Canada is Open for Business and Welcoming to Foreign Investment

  • Canada is the best country in the G20 for doing business over 2020-2024.
    Economist Intelligence Unit (EIU), November 2019
     
  • Canada is the easiest place to start a business in the G20.
    World Bank, Doing Business 2020
     
  • Canada’s welcoming and robust business environment puts it first among OECD countries for its attractiveness for entrepreneurs.
    OECD Indicators of Talent Attractiveness, May 2019
     
  • Foreign investors choose Canada to invest; Canada had the second largest Foreign Direct Investment (FDI) stock-to-Gross Domestic Product (GDP) ratio and the third highest FDI inflows per capita among G20 countries in 2014-2018.
    United Nations Conference on Trade and Development (UNCTAD), 2019 

Low Cost, Low Tax Environment

  • Canada's combined federal-provincial statutory corporate income tax rate of 26.6% in 2019 is one of the lowest in the G7.
    Finance Canada calculations and OECD Tax Database, April 2019
     
  • Canada offers foreign investors a tariff-free zone for manufacturing, having eliminated tariffs on machinery and equipment (M&E) and industrial inputs in 2015.
    Finance Canada (http://www.fin.gc.ca/ftz-zf/index-eng.asp)    
     
  • Canada offers advantageous tax treatment for investment in M&E: full deduction in the first year of the investment for the entire cost of machinery and equipment used for the manufacturing or processing of goods and of specified clean energy equipment.
    Finance Canada, Fall Economic Statement, November 2018
     
  • The new Accelerated Investment Incentive (AII) enables businesses of all sizes and all sectors to recover the initial cost of their investment more quickly – reducing risk and providing businesses in Canada with a true incentive to make capital investments.
    Finance Canada, Fall Economic Statement, November 2018
     
  • With the new write-offs for M&E and the AII introduced in November 2018, Canada’s marginal effective tax rate (METR) on new business investment (13.7%) is the lowest in the G7 and significantly lower than that of the U.S. (18.4%). Furthermore, Canada’s METR is significantly lower than the U.S. one for investment in the manufacturing & processing (3.1% vs. 19.5%) and services (17.2% vs. 24.5%) sectors.
    Finance Canada, July 2019 

Highly Educated and Competitive Workforce

  • Canada has the most educated talent pool in the OECD, with more than half of its population aged 25 to 64 having a tertiary level education.
    OECD, Education at a Glance, September 2019
     
  • Canadians are linguistically diverse, with 1 in 5 Canadians speaking one of over 200 languages in addition to either English or French.
    Statistics Canada, Census 2016 

Environment Conducive to Leading-edge Innovation

  • Canada leads the G20 in R&D spending in higher education as a share of GDP.
    OECD Main Science and Technology Indicators, August 2019
     
  • Canada offers one of the most generous R&D tax incentives in the G7.
    OECD Science, Technology and Industry Scoreboard, 2017
     
  • Toronto added more tech jobs in the past five years than anywhere else in North America, establishing the city’s status as a “hotbed of innovation”.
    CBRE Group Inc., July 2018  

Gateway to North America and the World

  • Out of Canada’s 20 largest cities, 16 are located within a 90 minute drive of the Canada‑U.S. border, anchoring cross-border Canada-U.S. trade valued at over US$1.7 billion each day.
    Statistics Canada and U.S. Bureau of Economic Analysis, 2019
     
  • As a NAFTA member, Canada offers foreign investors preferential access to a North American market of over US$23 trillion in GDP with over 489 million consumers.
    IMF, World Economic Outlook, October 2019
     
  • With the ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the provisional implementation of the Comprehensive and Economic Trade Agreement (CETA):
     
    • Canada is the only G7 country with a trade agreement in place with all the other G7 countries.
    • Businesses in Canada now enjoy preferential access to a global market with a combined GDP of US$53 trillion, representing almost two-thirds of the world’s output of goods and services, and home to nearly 1.5 billion consumers.
      IMF, World Economic Outlook, October 2019 

Top Performing Economy

  • Canada’s economy is forecasted to grow at 1.8% in 2020, the second fastest growth among the G7 countries.
    IMF World Economic Outlook, October 2019
  • Since May 2014, Canada created more than 1 million jobs, an increase of almost 8%, with over 88% of those being full-time positions.
    Statistics Canada, November 2019 

Fiscal Soundness

  • Canada enjoys the lowest net debt-to-GDP ratio in the G7, and its ratio is expected to remain the lowest in 2020 at 26%.
    International Monetary Fund (IMF), World Economic Outlook, October 2019
     
  • Canada tops the G20 with Germany and Australia for its fiscal soundness, with a triple A credit rating.
    Standard & Poor’s, Moody’s and Fitch 

One of the World’s most Stable Financial Sectors

  • Canada’s banking system ranks second in the G20 and sixth among 141 countries; it is one of the soundest in the world.
    World Economic Forum, Global Competitiveness Index 2019-2020
     
  • Six of the world’s 50 safest banks are in Canada.
    Global Finance Magazine, 2019

Great Place to Live and Prosper

  • Canadians enjoy one of the highest standards of living in the G20 as measured by GDP per capita (US$).
    IMF, World Economic Outlook, October 2019
     
  • Canada ranks among the top five OECD countries for its overall living conditions and quality of life.
    OECD, Better Life Index 2017
     
  • Canada is the most democratic country in the G20.
    EIU, Democracy Index 2018