A new report for the Conference Board of Canada comparing both stated policies and actual practices related to foreign direct investment screening in six countries concludes that more clarity is needed in Canadian policies.

The report by journalist and author Andrea Mandel-Campbell takes the first-ever look at both the foreign investment review policies and practices of Canada, France, Germany, Italy, the United Kingdom, and the United States.

This report compared both stated policies and actual practices related to foreign direct investment screening across nine strategic sectors: airport infrastructure, ports, banking, utilities, railways, telecommunications, media, airlines, and nuclear power and uranium production.

The six countries reviewed fall along a continuum in the openness of their foreign investment review regimes. Based on the findings, the UK is by far the most open to foreign direct investment, followed by the United States and Canada.

The UK’s so-called “light touch” approach to regulation has few foreign investment limitations, and a competitive model based on attracting the regional or global headquarters of multinational enterprises. At the other end of the spectrum is the “economic patriotism” embraced by France, a mercantilist investment model in which national champions are encouraged to merge and acquire abroad, but are shielded from foreign takeover at home.

“Clarifying our foreign investment review policies is important, especially since the federal government recently showed that it is prepared to block the sale of Canadian-owned firms to foreign buyers,” says Mandel-Campbell.

Mandel-Campbell’s conclusion is that a more open investment model, along the lines of the UK’s approach, might be more advantageous to Canada. Protected sectors would have access to more capital, and increased competition would spur them to innovate and expand. A less fettered flow of inbound foreign direct investment would draw more funds into the domestic economy and stimulate capital investment and productivity.

The report, Foreign Investment Review Regimes: How Canada Stacks Up, is publicly available at www.e-library.ca.