foundation of canada asia pacific - Content Tagged with

TODAY’S DELAY IS TOMORROW’S LOSS
At the end of 1997, the stock of Canadian direct investment in the Asian members of
APEC 6 was well below the proportion of our global exports going to the same countries. 7
The growth of new investment has been slowing. Between 1990 and 1997 — before the
major impact of the Asian crisis hit trade and began to distort the figures — Canadian
exports to the Asian members of APEC rose by 55% to make up 8% of Canada’s total
exports. In the same period, Canadian investment in the same economies rose an impressive
153% according to Statistics Canada, though starting from a relatively low base. 8 At the
end of this period it represented 5.9% of Canada’s worldwide stock of foreign investments.
However, most of that surge in investment was in the period 1990-94 — since then,
Canadian FDI in Asian APEC has risen by an average of only 4% a year, well below the
12.8% growth rate of Canadian investment globally. This is surprising, as in recent years
a number of Asian economies have relaxed their restrictions on inward FDI. The overall
result is that the share of total Canadian FDI held in Asia has dropped steadily since
1994. In light of the research on investment-trade linkages, this does not augur well for
a resurgence in Canadian exports to Asia in the next few years.
37
Fortunately there is some evidence that the official statistics gathered of Canadian DIA
may understate the level of investment. In addition, very recent trends in merger and
acquisition (M&A) activity that have not yet been captured in official statistics show
that, in at least that area, DIA has picked up dramatically since the Asian crisis. Just as
importantly, it has shifted significantly into manufacturing and financial services, away
from the previous emphasis on mining.
CANADIAN DIRECT INVESTMENT IN ASIA BY ECONOMY (C $MILLIONS)
1992
1993
1994
1995
1996
1997
1998
Australia
China
Hong Kong (SAR)
India
Indonesia
Japan
Malaysia
New Zealand
Singapore
South Korea
Taiwan
Other Asia/Oceania
2,565
43
883
98
877
2,521
90
142
2,119
51
194
696
2,483
225
1,532
110
909
2,845
92
478
2,217
123
150
795
2,761
257
2,074
169
1,259
3,485
118
929
2,369
137
192
1,011
3,080
375
2,367
179
1,472
2,735
96
1,446
2,342
146
252
1,157
3,085
426
2,670
128
1,575
2,676
-40
1,452
2,213
188
248
1,597
3,039
440
2,610
119
1,983
3,002
168
1,973
2,241
172
238
1,607
2,953
464
2,922
226
1,887
3,150
216
2,069
2,202
292
243
1,590
Total Asia
10,279
11,959
14,761
15,647
16,218
17,592
18,214
Canadian Investment in
Asia as % of World Total
9.20
9.77
10.09
9.53
8.94
8.55
7.60
Source: Adapted from Statistics Canada, Canada’s International Investment Position, 1998
(Cat. No. 67-202), pp. 9-14, Table 5.