Key elements of the country that would encourage foreign direct investment

Justification of Country of Choice

Canada has been selected based on different implications of FDI. First of all it is one of the most technologically advanced countries in the world that makes one of the strongest impacts on business operations. Beside that -

Canada offers qualified workforce

·????????The business environment of Canada is welcoming to for Foreign Investments

·????????The country has large reserve of gas, oil and ore

·????????The financial and banking sector of the country is strong

·????????Economy of the country is dynamic and has around 38 million population.

Source: Canada Action, (2020). What Natural Resources Does Canada Have in Abundance?. [Online] Available at: https://www.canadaaction.ca/what_natural_resources_does_canada_have[Accessed 21 November 2022].

Government Policies

The current policies of Canada actively encourage FDI and develop a sound business environment as according to the report of World Bank 2020 Canada is in 23rd position out of 119 countries in case of doing business in a desirable environment.

In terms of law and regulations FDI in Canada is regulated under the provisions of the Investment Canada Act (ICA).

Right now Canada has 14 free trade agreements where they are connected with 51 countries.

Source: Santandertrade, (2022). Canada: Foreign Investments. [Online] Available at: https://santandertrade.com/en/portal/establish-overseas/canada/foreign-investment[Accessed 20 November 2022].

Economic Growth

After the severe recession in 2020 that was caused by the pandemic, Canada has been able to achieve economic recovery from the Q1 of 2021(Cléroux, 2022).

The government is making its way to achieve a net zero economy by developing clean technologies specially focusing on electric vehicles and battery manufacturing.

Commodity prices sharply increased in Canada because of the Ukraine versus Russia war but Canada still expects to achieve a net GDP growth rate of 3.1% in 2023(Masse &Bensaid, 2021).

Over the last 9 years instead of the harsh impact of the pandemic Canada is still continuing to reduce their corporate tax rate whereas it was around 18% in 2010 and reduced to 15% in 2019(Masse &Bensaid, 2021).

Unemployment rate of Canada is around 5.2% in 2022 according to the World Bank.

Source: Statistics Canada, Table 36-10-0025-01, retrieved May 31, 2021.

·????????Large economic countries from Asia Pacific increased their investments in Canada after the Pandemic.

Source: Asia Pacific Foundation of Canada (2022). Investment Monitor 2022: Post-Pandemic Recovery and Canada-Asia FDI: Is the Rebound Sustainable?. [Online] Available at: https://www.asiapacific.ca/publication/investment-monitor-2022-post-pandemic-recovery-and-canada[Accessed 21 November 2022].

Culture

Canada is considered as a multiple-cultural country because people from different countries immigrate in Canada for better life support. Based on the large number of immigrant people, cultural policies of Canada evolved in the last couple of years.

Cultural diversity in the workplace allows the employees to increase their productivity and help businesses to increase their profits. 1% increase in cultural diversity is equal to around 2.4% increase in revenue and 0.5% in productivity(Momani, 2021).

Among the millennial around 47% found that cultural diversity is the new feature in the Canadian business environment while developing business strategy(Momani, 2021).

In the case of the business owners almost 67% of the talented CEOs of Canada look for diversity in the workplace(Momani, 2021).

Demographics

In 2021 the estimated population of Canada was around 38.07 million that was around 0.86% more than 2020. One of the main reasons behind the increasing population in 2021 is because of people from other countries entering into Canada.

One of the most important factors for a business to consider about the population of Canada is that there are 50.36% female and 49.6% male.

GDP per capita of Canada in 2021 was 51,690 PPP dollars(Statistics Canada, 2022).

Natural Resources

Canada has one of the largest reserves of oil and ore. In recent years the country has been working on utilizing clean fuel in order to reduce carbon emission.

Most of the businesses that are engage in acquiring natural resources highly depend on new technology to transfer their business towards a clean business

Right now Canada is the number one producer of Potash in the world, number 2 in producing uranium (a key element for nuclear power) and niobium, 3rd in diamond, platinum and graphite producing and standing in the force position in aluminum and refined is zinc production.

Please basically indicate that the country is full of natural resources and it can be a great opportunity for a new business to utilize the local natural resources to facilitate the manufacturing and production.

Source: Canada Action, (2020). What Natural Resources Does Canada Have in Abundance?. [Online] Available at: https://www.canadaaction.ca/what_natural_resources_does_canada_have[Accessed 21 November 2022].

Potential Risks Related to Investments

As an individual country the amount of exposure to the United States economy for Canada is higher than any other countries in the world therefore the economy largely depends on United States

After the pandemic productivity in manufacturing industry has been deteriorated because of economic downturn (Statistics Canada, 2022)

The population is aging very fast therefore there is a generation gap exist

Household debt is very high around 186.2% of their disposable income(Cléroux, 2022).

Recommendations on How to manage Risk that are related to Investment

Some of the initiatives are already taken by the government as it is now more focused on increasing the use of renewable and Clean Energy as well as strategic innovation for business development.

Government of the country is also making the necessary effort to develop global skills among the population.

Most of the problems or risks that are associated with FDI, are on a national level, therefore they cannot be managed by a single business but appropriate measures can be taken to reduce the impact of these risks.

In order to reduce risks or to manage risks it is important for a business to understand the market by conducting market research to analyze whether the product will fit in the market or not.

References of the In-Text Citation

Cléroux, P., (2022). Economic outlook: A return to normal in 2022?. [Online] Available at: https://www.bdc.ca/en/articles-tools/blog/2022-economic-outlook-return-normal[Accessed 22 November 2022].

Masse, M. &Bensaid, K., (2021). Canada: Global Rules on Foreign Direct Investment, London: Norton Rose Fulbright.

Momani, B., (2021). Diversity is good for business. [Online] Available at: https://uwaterloo.ca/news/global-impact/diversity-good-business[Accessed 22 November 2022].

Statistics Canada.(2022). Disaggregating wage growth: Trends and considerations. Catalogue 11-631-X. Ottawa: Statistics Canada. Released August 8, 2022.

Statistics Canada.(2022). Investment, Productivity and Living Standards. Catalogue 11-631-X. Ottawa: Statistics Canada. Released September 1, 2022.