Executive Summaries Feb 26, 2020
Do Quebec Businesses Attract Foreign Investors?
Global competition continues to intensify on an exponential basis. With the rise of emerging economies, disruptive new technologies and large global value chains, entrepreneurs must increasingly push the limits of their innovations to remain competitive in their markets.
It is against this backdrop that Investissement Québec ("IQ") began repositioning its activities on February 3, 2020, with a view to offering Canadian companies solutions to accelerate their global development. The government of Quebec is therefore acquiring additional levers, increased financial resources and an enhanced team to boost the growth of Quebec businesses.
One of the objectives of this transformation by IQ is to attract more foreign investment and talent. To achieve this, the organisation is committed to taking more risks in order to stimulate foreign direct investment ("FDI") in Quebec.
Investissement Québec must take more risks and be even more attentive.
Investissement Québec hopes to carry out its new mandate by focusing on the following three priorities :
- Increased regional presence
- Better international coordination
- Greater willingness to take risks
By reducing the administrative burden on businesses and encouraging risk-taking, IQ's efforts will ultimately make FDI a key element in the competitiveness of our regional economy.
What Trends Have Emerged in Recent Years?
In terms of competitiveness, Montreal is positioned as Canada's fastest growing city in 2018. This is due in particular to its large pool of talent and expertise, which positions it as a prime target for foreign investors.
In fact, for the past few years, FDI has been booming in the Greater Montreal area. More and more foreign businesses are choosing Montreal and its surrounding areas as their base.
In recent years, Canada's ratio of outward FDI to GDP has been 162% higher than the OECD ratio.
FDI from the high-technology sector alone accounts for more than 50% of total investment in 2019.
According to the organisation Montreal International, 2019 was a record year in terms of FDI : more than 89 foreign businesses invested in Montreal, totalling $2.642 billion, which represented an increase of 164% since 2015. There is no indication that this growth will slow down as the number of projects benefiting from FDI has increased from 39 in 2015 to 89 in 2019. However, since 2019 we are seeing a new trend : the emergence of Asian FDI, which has tripled since 2018. Indeed, last year alone, 52% of FDI came from the Americas, 33% from Europe and 15% from Asia.
What Impact Can We Expect for the Quebec Market?
FDI helps rekindle the international appeal of the Quebec market. The province is gaining momentum and is making efforts to become increasingly competitive in the eyes of foreign investors. The more investments are made, the more our market stands out.
The government has a vested interest in focusing its efforts on key sectors of our economy and filling the gaps in the major capital chains, as it is currently doing. To make Quebec a leader in the global economy, we must not only establish an economic development strategy consistent with the territory's overall strategy, but also build partnerships between community players.
It is therefore with the support of Quebec-based institutional investors, particularly Investissement Québec, that Quebec businesses will ultimately propel the region as a globally competitive economic hub.