Archived — Perspectives on North American Free Trade Series Number 02—Modelling Links between Canadian Trade and Foreign Direct Investment, April 1999
Strategic Policy Sector
Economic Research and Policy Analysis Branch
This paper examines the impacts that Canadian direct investment abroad (CDIA) and inward FDI have had on the Canadian economy, and, more specifically, on trade. It documents that FDI is complementary to trade; that is, increases in FDI will cause increases in trade levels. It also finds that increased levels of inward FDI stock are also associated with increased imports into Canada, however, the size of this impact is only one-third the impact that increases in outward FDI stock have on exports. Thus, they conclude, a simultaneous increase in both outward and inward FDI would improve Canada's trade performance.
Catalogue number: C21-28/3-1999
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