Ivey Publishing
Manufacturing Investment
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7 pages
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Ivey Business Journal
When it comes to attracting investments, Canada is a laggard despite being a trading nation with all the talent and tools required. The main reason is that few in Canada have tried to answer the why-invest-in-Canada question. With or without Canadians leading large corporations, investment decisions made in Detroit are not influenced by any special love for Canada; they’re based on business. In 2016, the argument for playing the incentive game is very strong, and Canada could end up being bypassed for new plant investments for an entire investment cycle. But Canada isn’t just losing the competition for new auto plants. While the Canadian economy still attracts a reasonable share of foreign direct investment, there has been a significant shift in the industrial composition of Canadian FDI inflows. Over the past 15 years, Canadian oil and gas FDI has grown four-fold, while there has only been modest growth in manufacturing investments. As a result of weak performance in new greenfield projects, staunch free-marketers now accept the need to play the incentive game. Ivey’s Lawrence Centre has developed three overarching recommendations to help Canada raise its investment-attraction game to the level of its best-practice competitors: 1. All governments involved should make a formal commitment to act in a coordinated fashion when engaged in investment attraction. 2. Government players should jointly develop an explicit business plan for investment attraction to guide all parties, with results judged by incremental tax revenue generated. 3. Canadian political leaders and senior government officials should become engaged in a sustained way in all stages of the investment attraction process.
General Management/Strategy
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