Determinants of Canadian outward foreign direct investment: a panel data analysis

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Date

2019

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University of New Brunswick

Abstract

This report attempts to examine the trends and the impact of various factors on Canadian outward foreign direct investment (OFDI) from the perspective of the home and host countries. Using a panel data of 21 host countries and various regression techniques for the period of 1990 to 2017, we find that Canadian OFDI has a lag effect during the study sample period; the value of OFDI in the current period is significantly affected by the previous period. The GDP of both home and host countries, the distance between the two countries are important determinants of Canadian OFDI. Canadian enterprises tend to choose countries with a high level of economic development, close geographical proximity, and long and stable trade relations when selecting their OFDI location. The results of this Canadian study are largely consistent with the literature on similar studies for other countries.

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