Are multinational corporations (MNCs) harming their home country economies by outsourcing activities and investing abroad? Canadian Outward Foreign Direct Investment and Its Implications for the Canadian Economy focuses on the economic implications of outward foreign direct investment (OFDI) undertaken by Canadian MNCs.
In addition to a literature review, the activities of 22 Canadian MNCs in 11 different industries are examined. Comparing the record of pairs of MNCs of comparable size and product scope allows examination of the relationship between OFDI and domestic investment while holding other factors roughly constant.
The report concludes that OFDI and domestic investment are more likely to be complements than substitutes for Canadian MNCs; that is, OFDI leads to higher domestic capital investment by Canadian MNCs. On the whole, the evidence provides no support for the concern that MNCs will do less investing in the home country as a consequence of undertaking more OFDI.