Canada didn’t attract record foreign investment because ownership restrictions are harmless. It attracted record investment despite them.
The right response to Canada's record 2025 FDI number is to disaggregate it before concluding anything. C$96.8 billion, the highest inflow since 2007, is a real result that reflects real investor confidence in Canadian fundamentals: stable governance, low business taxes, trade agreement access, and a resource base the world urgently needs. It should be acknowledged for what it is. It should not be mistaken for evidence that Canada's structural constraints on foreign investment are inconsequential. The record was driven substantially by a single swing factor, the United Kingdom's emergence at 12% of total inward FDI as British capital seeks rule-of-law jurisdictions post-Brexit, and by merger and acquisition activity that recycles existing Canadian assets between owners rather than creating new productive capacity. Neither of those is evidence that the foreign ownership restrictions in telecoms, airlines, and financial services are not costing the economy approximately C$10 billion annually in foregone productivity. They are performing well enough that no one stops to count what they cost.
The Hejazi-Trefler analysis deserves the attention it has not received in policy discussions. Their core finding is not a speculative estimate. It is an empirically derived result from industry-level data across OECD countries over multiple decades, tested through multiple estimation approaches. The mechanism is well-understood: foreign-owned firms that enter a sector bring technology, management practices, global supply chain access, and competitive intensity. Domestic incumbents facing foreign entry must improve their productivity or lose market share. When restriction prevents entry, domestic incumbents operate without that pressure. The sector stagnates. The workers, capital, and resources in that sector produce less output per unit of input than they would in a more competitive environment. The C$10 billion annual estimate is the aggregated productivity cost of that stagnation across the restricted sectors. It compounds every year that restriction persists.
The telecommunications sector is the clearest visible evidence. Bell, Telus, and Rogers operate in a market with meaningful foreign ownership restrictions. The result, consistently documented in OECD comparisons, is mobile and broadband prices among the highest in the developed world relative to income, alongside below-average network performance on several measures. Every Canadian household and business that pays elevated telecommunications costs is indirectly subsidizing a restriction policy whose primary beneficiary is incumbent shareholders. The economic cost is diffuse, arriving as a slightly higher monthly bill for every connectivity-dependent activity in the country. That diffuseness is the political protection the restriction enjoys: it costs every Canadian something they can barely see, and benefits a concentrated set of shareholders who can see it very clearly.
Steven Globerman's longitudinal analysis, covering Canadian FDI from 1990 to 2024, documents a pattern that the record headline number obscures. Canada's share of total OECD FDI flows declined substantially after 2015, even as absolute inflows grew in healthy years. Australia, with a comparable resource-weighted economy and similar governance characteristics, has consistently attracted a larger share of global FDI relative to its GDP. The implication is that Canada is performing below its structural potential as an investment destination, and that the record 2025 result reflects exceptional circumstances rather than a structural improvement in Canada's competitive position. When exceptional circumstances normalise, the structural underperformance reasserts itself.
The Indo-Pacific is the most strategically important emerging source of inward FDI and the least systematically captured in Canada's investment attraction apparatus. British Columbia captured 37% of Canada's Indo-Pacific foreign direct investment in 2024, totalling C$7.1 billion, led by critical minerals investments. The Canada-EU CETA agreement already provides preferential access for European capital. CEPA with India entered into force in April 2026. The CPTPP framework covers Japan, South Korea, and Australia. The trade architecture for attracting Japanese, South Korean, and Indian industrial capital into Canadian critical minerals processing and clean energy exists. What is missing is the operational clarity that allows transactions to be structured with confidence they will complete. The Investment Canada Act's national security review framework, as applied to critical minerals, is not necessarily too permissive or too restrictive. It is, in the assessment of allied investors who have attempted transactions, unpredictable. Uncertainty is a larger barrier to long-term industrial capital than restriction level, because capital commitments at the scale of a processing plant require regulatory certainty over a multi-decade horizon.
The distinction between greenfield and M&A FDI matters more than the headline number for understanding what investment is actually doing to Canadian economic capacity. Greenfield investment, the construction of new plants, facilities, and supply chains, creates new productive capacity, generates employment, and brings the technology and management practice transfer that drives productivity growth. Merger and acquisition activity recycles existing assets. The Volkswagen battery facility in St. Thomas and the Stellantis-LG plant in Windsor are greenfield investments that generate exactly the productivity benefits Hejazi's research identifies. A leveraged buyout of an existing Canadian telecommunications company does not. Canada's FDI policy should be optimising for composition as much as for volume, and the composition data, when it becomes available for 2025, will tell more about the investment's economic value than the headline C$96.8 billion.
The argument for addressing foreign ownership restrictions is more politically achievable now than it has been in thirty years. The trade diversification imperative created by US tariff policy in 2025 made the case for attracting allied capital into restricted sectors self-evident in a way it was not when the argument was primarily technocratic. When Canada needs Japanese, South Korean, and European capital in telecoms, financial services, and airlines as strategic partners in a diversified trade relationship, the ownership restrictions that have historically prevented that capital from entering those sectors are clearly a strategic liability, not just a productivity cost. The government that commissions the full review of foreign ownership restrictions across sectors, with explicit quantification of the productivity cost of maintaining each restriction and transparent comparison to any legitimate national interest rationale, will be doing something no previous government has been willing to do: counting what the restrictions cost, in public, and letting the number make the argument.