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Inward FDI and Productivity Performance in Canadian Industries: Does the Country of Origin Matter?

By Eric C.Y. Ng and Malick Souare.

This paper investigates as to whether the productivity impact of inward foreign direct investment (FDI) in Canada differs by the country of origin. Using panel data on Canadian industries, the study finds that only FDI originated from the United States (U.S.) has had a significant positive impact on productivity growth in industries in which it operates. This could be of either because of higher productivity of the U.S.-owned firms or technological knowledge spillovers from the U.S.; or a combination of the two effects. A further investigation also shows that foreign investment from the U.S. generates positive productivity spillovers to Canadian-owned firms within industries.

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