Why invest in Canada? Carney better have a good answer for everyone

John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.

Why invest in Canada? Ottawa hasn’t offered foreign or domestic investors a compelling answer for more than a decade. It’s a hard truth at a difficult moment. In 2007, foreign direct investment (FDI) amounted to about 8 per cent of GDP; last year it was about 2.9 per cent.

Between 2014 and 2025, more than $828-billion in capital left Canada. Our elbows are down when competing for investment dollars, reducing job opportunities and lowering living standards compared with the U.S., Britain and the EU. Amid an escalating tariff battle with the U.S., that price multiplies the financial pain.

The Canada Investment Summit is an admission that the pain is real. Hosted by Prime Minister Mark Carney, the summit that begins in Toronto today gathers the world’s most important foreign investors to kick the tires on roughly 160 investment-ready projects. Mr. Carney wants to generate a trillion dollars in investment to expand the energy, defence, artificial intelligence, resources and transportation sectors.

Everything we know about Carney’s investment summit

Foreign investors didn’t come to Toronto, as the summit’s press release suggests, because “Canada has what the world wants.” What foreign investors want is a better answer from Mr. Carney on why they should invest in Canada. If he has one, it will be in his government’s fall budget.

The canary in Canada’s economic mine is the state of FDI. It is easy to be lulled into a false sense of confidence that the canary is doing alright based on top-line FDI numbers.

In 2025, for instance, the FDI data shows that investment inflows exceeded outflows, a first in 10 years. But as Charles Lammam pointed out in a paper for the Montreal Economic Institute in June, this was “not driven by a surge in foreign confidence, but by a sharp decline in Canadian outward investment, likely reflecting … anti-American sentiments.” FDI relative to GDP in 2025 versus 2024 hardly budged.

Is Carney a closer? The Canada Investment Summit will be the ultimate test

Importantly, there are three different types of FDI. Each influences job growth, productivity and economic development to various degrees.

Last year, total FDI was $93.6-billion. Just under half, $43.6-billion, involved mergers and acquisitions by foreign companies buying Canadian companies. M&A deals can give a lifeline to business, but they do not guarantee to boost employment or investment in productivity-enhancing equipment. Indeed, some may lead to the loss of head office jobs and the export of intellectual property and associated revenues.

Additionally, M&A deals are largely concentrated in the energy and mining sectors, signalling that foreign investors see Canadian investment opportunities through a very narrow lens.

Moreover, $33.6-billion came from retained earnings by foreign-owned companies in Canada, funds often used to repay debt, restore cash reserves or to buy financial instruments, rather than create new jobs or invest in new equipment.

Foreign money is flooding into Canada. But a closer look reveals much of it is coming from the U.S.

This leaves a small proportion of FDI in Canada that qualifies as greenfield – investments by foreign companies that result in the creation of new factories, or facilities, investment in new, productivity-enhancing equipment and new jobs.

The data on business investment per worker suggests underinvestment presents an existential problem. U.S. business investment per worker far exceeds that of Canadian companies, as do investments by U.S. companies in machinery and equipment workers needed to do their jobs. This puts Canadians on an accelerating trajectory of declining living standards compared with Americans.

TD Economics characterizes Canada’s investment performance as “abysmal.”

It needn’t be this way. Mr. Carney’s decision to host the Canada Investment Summit in the weeks before his government’s fall budget suggests he knows it.

Between 2000 and 2010, growth in non-residential investment in Canada clocked in at 7 per cent annually. This was a decade-long investment supercycle driven by the resource sector that lifted living standards.

As we face down President Donald Trump and the impossibility of making a trade deal with the U.S. while he is in the White House, Mr. Carney and his government must act decisively.

His government’s fall budget should give foreign (and domestic) investors clear signals that Canada wants their business.

Those signals would include, as TD Economics has noted, reducing royalties, lowering corporate income and capital taxes, making it easier for companies to scale and prioritizing the development of required skilled labour.

Today and tomorrow, foreign investors are in Toronto kicking project tires and being charmed by Mr. Carney. If he wants them to return with cheques, the Prime Minister needs to close the sale in his government’s fall budget.