Canada is an underachiever when it comes to global capital market participation, says an e-brief from the C.D. Howe Institute, and the country should make itself more open to foreign investment.

In “Canada Is Missing Out On Global Capital Market Integration,” Jack M. Mintz and Andrey Tarasov write that, far from being ‘hollowed-out,’ Canada stands only 46th among 73 countries when ranked by foreign direct investment (FDI) inflows.

Since 2001, the most open economies — as measured by the sum of investment inflows and outflows as a share of gross domestic product (GDP) — were Luxembourg, Hong Kong, Singapore, Iceland, and the Netherlands.

In contrast, among the G7 countries, Canada was less open than the United Kingdom or France, and received lower FDI inflows as a share of GDP than did major developing countries such as Brazil, China, or Mexico.

To improve its performance, the Canadian economy needs to become better integrated with world capital markets, and Canadian businesses need to be able to participate more fully in global supply chains.

The study is available at http://www.cdhowe.org/pdf/ebrief_48.pdf.