One of the key components of a successful economy is its ability to attract investment – both from inside the country and from foreign sources. Attracting investment is especially important for Canada, as a relatively small open economy that is heavily dependent on trade. For decades, Canada was very successful as a desirable destination for diverse sources of investment, largely directed to our wealth of natural resources and the many innovative technologies Canadians have devised to capitalize on the value of these resources in responsible and efficient ways.
The Liberal lost decade, starting with the election of former prime minister Justin Trudeau in 2015, reversed Canada’s appeal to investors. Much of this was because of the Trudeau government’s sabotage of our oil and gas sector. It also was driven by Trudeau’s erratic and ideology-driven policies which grew government massively, hindered private sector output and employment and spent massively on ineffective so-called climate initiatives. Perversely, as this author noted in her last column, Trudeau’s policies intended to reduce income inequality actually worsened the income gap.
Data for foreign direct investment in 2025 appeared to indicate a positive change in direction, as $96.8 billion worth of foreign investment flowed into Canada last year. This was the highest level since 2007. Most economic data these days are quite negative for Canada. For example, the labour force numbers that Statistics Canada released last Friday for April 2026 showed further jobs losses of 18,000, and an increase in the unemployment rate to 6.9 per cent, a six-month high.
For the first four months of this year, a record 112,000 jobs have been lost, primarily in the wealth-producing private sector. Public sector employment remained largely unchanged in this four-month period. So much for government claims of cutting back on government employment. It seems the same destructive cycle is still in place in Canada, with the wealth-consuming public sector expanding while the private sector that pays for government contracts. This is hardly a recipe for future economic success, especially considering that Prime Minister Mark Carney continues to create new federal government bureaucracies every few weeks or so.
Given all the negative news on the economy, the fact that foreign investment did improve in 2025 was pounced on by the very vocal Liberal voices on social media and elsewhere as a sign things were looking up under Carney. However, a closer examination of the data revealed that the news wasn’t exactly positive. About half of this foreign investment was taken up by mergers and acquisitions. In other words, largely U.S. companies were snapping up Canadian companies, likely because so many Canadian businesses are currently struggling and looking for some kind of lifeline.
Foreign investment that is concentrated in business takeovers does not tend to end up benefitting the recipient nation. In fact, it is often followed by the relocation of those Canadian businesses to another country. Canadian firms are already leaving Canada in large numbers, primarily going to the U.S., because of the difficult business climate in Canada created by bad government policies. So sadly, these investment numbers are not the positive sign they initially seemed to be.
Some analysts noted that takeovers of Canadian businesses by foreign investors outside of North America was significantly motivated by the belief that Canada provided a conduit to the enormous U.S. market. Yet the Carney government continues to be hesitant – if not downright obstructionist – to get down to the business of negotiating a renewed trade agreement with the U.S. and Mexico. The fact that so much of the Canadian economy depends heavily on trade with the U.S., and the fact that foreign investment is attracted by the perception of Canada having easy access to the U.S. market, should be reasons for the Carney government to prioritize pursuing a renewed USMCA/CUSMA deal. Instead, the federal Liberals appear to perceive political advantage in appearing to defy the U.S., no matter how much of a negative impact this has on Canada.
Over the last decade plus of Liberal government, foreign investment losses are estimated to be about a trillion dollars by the Royal Bank, among others. Although Carney appears to be viewed positively by international bodies, the fact that he personally has over 90 per cent of his investments in the U.S., not Canada, is also a consideration. A leader who tells Canadians to “buy Canadian” while not doing so himself not only stretches domestic credibility but influences global opinions as well. Despite an uptick in foreign investment in 2025, Canada clearly has a long way to go to regain its attractive status for investors. That will involve some significant changes in bad legislation and policies continued from the Trudeau years that, so far, the Carney government doesn’t seem willing to make.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
