Canada needs to reconsider its approach to foreign direct investment (FDI) in the innovation sector as part of a COVID-19 recovery plan, industry experts say.
The Council of Canadian Innovators’ latest report, titled a “Plan for Economic Recovery and Reorientation,” highlights eight recommendations from the tech sector on how to give a boost to Canada’s economy.
The eight recommendations range from introducing better return to work policies, revisiting the analytical framework for foreign direct investment (FDI), and increasing Canada’s IP capacity to help capture COVID-19 related R&D.
Ben Bergen, executive director of the CCI, said in an interview that FDI has typically benefitted specific industries that rely on supply chains. This model isn’t applicable to most tech companies.
“If Canada wants to create a wealth and prosperity strategy from innovation, it has to be in the ownership of the IP and the data that’s generated from headquartered Canadian companies.
“What you see in foreign direct investment when it comes to large tech companies is that there are not those supply chains. Google opens an office in Toronto, it’s not like there’s a supply chain of domestic firms into Google. You’re not getting that knockoff effect,” he said.
Bergen added that the government also looks into FDI as a form of job creation, but says the tech sector predominantly has “negative unemployment,” which means there are thousands of jobs to fill.
“Really, all you’re doing is in a lot of ways, taking away talent opportunities from your own domestic firms by supporting FDI,” he said.
The report indicated that as part of the COVID-19 recovery plan, the government needs to help local firms that are working to help find solutions to the global pandemic.
“Throughout the pandemic, Canadian technology companies operating in the healthcare, education, remote work, and enterprise sectors have actively provided their services and products to help fight the spread of COVID-19 in Canada,” the report said.
Despite the contribution Canadian tech firms have made, the report adds that Canada has “featured incentivizing the expansion of foreign tech branch plants across Canada over developing strategies to grow domestic innovators.”
Government should conduct study into FDI
Bergen noted that revisiting the FDI framework would mean…