Much of new Canadian investment abroad is to developing countries. Both inward and outward investment have had important effects on Canada's trade performance. Compilations based on data from the World Investment Report 1998, United Nations. Compilations based on data from Statistics Canada. Both inward and outward investment flows have had important effects on Canada's trade performance, as well as on its overall economic performance.
Investment is related to trade in a number of ways.
Over time, as our investors become more familiar with the host country markets, this strategy often generates increased trade opportunities for Canadian exporters. Canadian investment abroad and foreign investment in Canada can also be used to establish efficient operations to supply the international market by drawing on the comparative locational and production advantages of a host country, increasing the competitiveness and economic success of the Canadian host business and investor. Investment can also complement trade by providing strong trade linkages between a Canadian business or manufacturing enterprise and its foreign affiliate which the parent business establishes through direct investment. Conversely, low levels of import penetration into foreign markets are often linked to investment barriers. Trade and investment are thus increasingly intertwined.