Foreign Direct Investment (FDI), defined as an investment where a person or company from one country acquires 10% or more of the voting shares, or equivalent ownership of a business enterprise in another country, is central to Canada’s long-term competitiveness. Trusted, high-quality FDI strengthens economic resilience by anchoring supply chains, transferring technology, and building local expertise that endures through global shocks. As investors reassess risk in an uncertain geopolitical climate, the advantage now lies with countries able to offer secure production bases, transparent governance, and predictable regulatory pathways. Canada’s competitiveness will depend less on the volume of inflows and more on the permanence and depth of what those investments create at home.
A Tougher Global Climate for Investment
The global context for investment has grown tougher. In 2024, global FDI shrank by 11%, its second year of decline. Fewer big deals in infrastructure, energy, and agri-food, combined with supply chain turmoil and high interest rates, led multinationals to be more cautious. Europe’s flows dropped by nearly 58%, and developing economies posted uneven figures, with some gaining and others losing ground.
But North America was different. Inbound investment here rose 23%, led by U.S. projects in semiconductors and clean energy as a the result of major policy incentives and international supply chain realignment. The U.S. attracted a record $279 billion, while Canada managed to grow its FDI stock by 5.5% to $1.5 billion, led by energy, manufacturing, and advanced materials.
Figure 1: Canada’s global share of inbound FDI
Source: Invest in Canada (Note: All figures are in U.S. dollars)
American investors remain Canada’s largest foreign investor group, holding over half of total FDI; Canadian firms also focus heavily on the U.S. The result is a tightly integrated cross-border economy. When reindustrialization accelerates south of the border, many Canadian sites move in step. It also highlights the need for Canada to define a distinctive advantage that is based on credibility and readiness, rather than proximity alone.
Source: Library of Parliament
This investment dynamic sits inside a wider security shift.
From FDI to National Resilience
The definition of “investment-ready” has changed. Years ago, it meant having the right zoning and infrastructure. Now, it’s about verified ownership, secure data systems, a stable and clean power supply, transparent governance, and reliable logistics. Taken together, these features are what determine whether a site can be trusted to keep operating through disruptions and to meet today’s heightened security expectations from the start.
At the NATO Washington Summit in July 2024, allies adopted the Industrial Capacity Expansion Pledge, signaling that industrial capability is now viewed as a strategic asset. Factories aren’t just economic assets but matter for resilience and security. Joint procurement initiatives, such as the 1,000 Patriot missile order and the $700 million program for Stinger anti‑aircraft systems, show that production capability has become integral to deterrence. NATO members are even debating a new target: dedicating up to 5% of defence budgets to industrial capacity and enabling infrastructure.
Canada has adjusted its investment-security approach to match this new global definition of trust.
- Bill C‑34 (March 2024) expanded the government’s authority to pause or block transactions that pose economic or national security risks.
- Updated Investment Canada Act guidelines (March 2025) explicitly integrate economic security into national security reviews, addressing potential foreign dependencies or supply chain disruption.
- Public Safety Canada’s Sensitive Technology List (February 2025) identifies 11 risk sectors, from AI and quantum to life sciences and advanced manufacturing, subject to additional screening.
These provisions reinforce investor confidence by setting transparent expectations. Canada is open for business, but investment must align with allied security goals and preserve sovereign control of critical capabilities.
Agri-food as Proof of Concept for Trusted Sites
The agri-food sector demonstrates how trusted site readiness can work in practice. Once associated mainly with bulk exports, Canadian food production now integrates technologies like digital control systems, robotics, and traceability, all classified as security‑sensitive. The sector is formally recognized as critical infrastructure under Public Safety Canada’s framework, making reliability a precondition for future growth.
Allied and European buyers now evaluate more than price; they look for assurance that suppliers can maintain output through disruptions or cyber incidents. In this landscape, trusted readiness allows investors and customers to treat Canada as a predictable, long-term source rather than a temporary production stop.
Roquette’s pea‑processing facility project in Portage la Prairie, Manitoba, illustrates this transition. Long before construction, the company met environmental and supply‑stability requirements that align with NATO and EU standards for resilient production. The $600 million plant, the world’s largest pea protein processor, handles 125,000 tonnes annually and employs about 120 people. In 2024, Roquette announced an expansion supported by the Sustainable Canadian Agricultural Partnership, reinforcing how regulatory clarity can draw reinvestment. The project shows how processing capacity, once created, can evolve into a high-value, secure platform that stays rooted in Canada.
Under updated national security guidelines, such facilities qualify for screening where automation and data intersect with logistics or defence zones. The aim is balance: evaluate real risks early, then keep high-value projects on track. Classic FDI theory confirms this matters. Natural‑resource‑seeking investment tends to be transient, while efficiency‑ or strategic‑asset‑seeking projects create deeper value through processing, R&D, and networks that persist. Trusted readiness encourages this second kind of investment.
Canada’s Competitive Advantage in a Shifting FDI Landscape
Investors are looking for reliability: sites that meet security expectations and regulatory systems that do not change midway through construction. In this environment, Canada’s institutional credibility becomes a differentiating resource.
While the U.S. competes through incentives and the EU through single‑market coordination, Canada can lead through verified transparency, stable governance, and proven site readiness aligned with allied standards. Although Canada’s regulatory environment is still characterized by many barriers and restrictions, it already has important elements in place. For example, the provincial program Ontario’s Investment Ready: Certified Site Designation Program pre‑validates properties for zoning, environmental, and infrastructure conditions, with new streams for smaller sites and large “mega site” designations for strategic industries.
These efforts gain significance as global supply chains reorder and sourcing criteria tighten. Europe’s EU’s RESourceEU initiative, for instance, promotes non‑Chinese sourcing of critical inputs, and new Chinese restricted export controls are accelerating diversification. Buyers and investors will seek jurisdictions where reliability is verifiable and data security assured. Canada’s reputation for institutional stability and clear rules gives it that opening.
To hold this position, Canada should continue to integrate these strengths:
- Rule‑based transparency, backed by robust democratic institutions and stable regulations.
- Integrated infrastructure, where site readiness, national cyber‑security plans, and resilient energy/logistics can be scaled and harmonized to meet pressing international supply chain standards.
- Sectoral breadth and adaptability, ranging from critical minerals and agri-food to advanced tech, keeping Canada’s doors open for high-value transactions.
As global competition shifts from incentives to assurance, trusted site readiness can convert Canada’s credibility into tangible advantage. It offers a framework where investment, once established, becomes embedded capacity, supporting both economic and security resilience in a more uncertain world.
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
