Given the Donald Trump trade mayhem, it is a welcome message — with this proviso: we must be careful about how we proceed and remind Carney that while Canada is open for business, it is not for sale.
asserted
it → give → sale
The debacle of Hwy. 407 and the tragedy of Walkerton, to mention just two examples, remain fresh in the memories of many Ontarians.
asserted
mention → mention → Ontarians
As economist Armine Yalnizyan recently reminded us, the care sector should not be up for grabs.
asserted
sector → remind → grabs
Why Canada’s savings problem isn’t what it seems
The underlying assumption behind Carney’s pitch to attract international investment is that capital inflows will foster greater growth in the Canadian economy.
asserted
inflows → seem → economy
Implicit in this argument is the conventional view that investment is determined by an economy’s capacity to save.
asserted
investment → determine → capacity
If domestic savings are insufficient, the argument goes, foreign savings — in the form of capital inflows — can fill the gap and increase investment.
asserted
savings → go → investment
It is true, from an accounting perspective, that investment equals the sum of domestic and foreign savings.
asserted
investment → equal → savings
But this is an accounting identity; it does not imply causality.
asserted
it → imply → causality
Conventional economic theory nevertheless argues that capital will flow to countries where savings are scarce, facilitating a more efficient global allocation of financial resources.
But things are more complicated.
asserted
things → argue → resources
Canadian foreign direct investment abroad is significantly greater than foreign direct investment in Canada — about $2.4 trillion compared with $1.6 trillion in 2025, according to Statistics Canada.
uncertain
investment → compare → Canada
Second, international capital inflows have consequences that domestic capital movements do not.
asserted
movements → have → consequences
Foreign investment in Canada requires the conversion of foreign currency into Canadian dollars, increasing demand for the loonie and putting upward pressure on its value.
asserted
investment → require → value
An appreciating Canadian dollar, in turn, reduces the competitiveness of Canada’s tradable sector.
asserted
dollar → appreciate → sector
As a result, capital inflows can contribute to a contraction of export industries and industries that compete with imports.
asserted
that → contribute → imports
In other words, international capital inflows can create both winners and losers within the Canadian economy.
asserted
inflows → create → economy
The question, then, is not whether Canada should welcome investment.
asserted
Canada → welcome → investment
The real question is what kind of investment Canada should welcome, where it should be directed, and under what conditions.
asserted
it → welcome → conditions
Foreign portfolio investment — the purchase of Canadian stocks and bonds — can contribute to currency appreciation without significantly increasing Canada’s GDP.
asserted
investment → contribute → GDP
Beyond commissions earned by domestic financial intermediaries, these capital inflows do little to expand the Canadian economy.
asserted
inflows → earn → economy
This type of investment, therefore, should not be actively encouraged.
asserted
type → encourage → investment
Not all foreign investment helps Canada equally
asserted
investment → help → Canada
With foreign direct investment (FDI), we should distinguish between the so called brownfield and greenfield investments.
asserted
we → distinguish → investments
Brownfield FDI involves acquiring existing businesses or production facilities.
asserted
FDI → involve → businesses
Essentially, it transfers ownership from domestic to foreign agents, with little or no immediate impact on GDP.
asserted
it → transfer → GDP
Such investments should not be encouraged unless they are accompanied by meaningful economic benefits, such as increased production, technological improvements, productivity gains, or employment.
asserted
they → encourage → production
Greenfield FDI, by contrast, involves establishing a new operation from the ground up.
asserted
FDI → involve → ground
Because it creates new productive capacity, it contributes directly to the expansion of GDP.
asserted
it → create → GDP
This is the kind of foreign investment Carney should seek to attract to Canada.
asserted
Carney → seek → Canada
Its contribution to production, employment, technology, and productivity can outweigh the negative effects associated with currency appreciation.
asserted
contribution → outweigh → appreciation
Opening Canada to international capital without considering these differences risks confusing an increase in financial flows with an increase in productive capacity.
asserted
Opening → open → capacity
What matters is not simply how much foreign capital enters Canada, but what that capital does once it gets here.
asserted
it → matter → what
But being open for business does not mean being open to every investment on any terms.
asserted
being → mean → terms
The Aporia
