Inward FDI and Productivity Performance in Canadian Industries: Does the Country of Origin Matter?

This paper investigates whether the productivity impact of inward FDI in Canada differs by country of origin. Using panel data on Canadian industries, we find that only FDI originating from the U.S. has a significant positive impact on productivity growth in industries in which it operates. This could be the result of higher productivity of U.S.-owned firms, technological knowledge spillovers from the U.S, or a combination of the two effects. A further investigation also shows that foreign investment from the U.S. generates positive productivity spillovers to Canadian-owned firms within industries.