From the Executive Summary: This study examines investors' perceptions and actual experiences with the Foreign Investment Review Agency (FIRA). It is based primarily on the results of a detailed questionnaire sent to a respresentative sample investors who applied to FIRA, supplemented by extensive personal interviews with investors, government officials and other expert familiar with the FIRA process. The interviews with investors included not only organizations that applied to FIRA, but also firms that had explicity chosen not to do so.

From the Foreword: The first report in the series established how foreign investors perceive Canada as a place to invest ... A second report focused on the actual mandate and operations of FIRA ... This report presents a considered evaluation of the future role of foreign investment in Canada. Drawing on the Conference Board's acquired expertise in this field, and on extensive outside consultations, this report casts the foreign investment issue in a wide framework of economic and public policy considerations. It aims to inform and guide public discussions by setting out the broad influences moulding the behaviour of foreign direct investment and by presenting an analysis of specific public policy options for dealing with the inflow of foreign investment.

The first chapter of this document looks briefly at some of the factors underlying recent patterns of foreign investment. The next chapter of the paper discusses Industry Canada (IC) research that pertains to the role of foreign direct investment and the factors underlying recent investment trends. Chapter 3 considers the policy implications of the IC research in the context of Canada's role as both a significant host and an important source of foreign investment. In addition to examining the need for government intervention in foreign investment markets, this section considers the implications of the studies' findings for general government policy. Chapter 4 looks at foreign investment policy in an international context. The IC studies that examine foreign investment barriers and that have something to say about how to improve the international environment for foreign investment are discussed in this section. The paper's conclusions are presented in chapter 5.

From the back cover: Foreign direct investment and multinational enterprises play a major but controversial role in Canada. Why do we see multinational enterprises use the subsidiary to transfer their techniques and products rather than national enterprises selling their products to foreigners through markets? What impacts do multinational enterprises have on the economic growth, balance of payments, industrial performance, and national independence of the home country? Professor Safarian addresses these questions, and others, as he surveys the research of Canadian economists in this field. Although economists have recently produced more and better analysis of foreign direct investment, the author maintains that additional research is required. The complex macro- and micro-economic impacts require more precise theoretical and empirical study....Sarafin concludes that economists and other social scientists must close the gaps in understanding foreign direct investment.

The first section of this report identifies and discusses the range of policies that governments can implement to directly or indirectly influence inward foreign direct investment (FDI), as well as the behaviour of multinational companies in the host market. The following section sets out public policy criteria against which to evaluate the consequences of Canadian government policies toward inward FDI. The next section reviews the determinants of inward FDI, drawing upon the existing economic and international business literature. The subsequent two sections contain a broad overview of inward FDI patterns to Canada over the post-war period, with preliminary inferences about the influence of public policies on inward FDI flows, and discuss significant policy initiatives directed at influencing either the quantity of quality of inward FDI. These include the Foreign Investment Review Act, the Investment Canada Act, and the North American Free Trade Agreement. This is followed by a section that identifies Canadian government policies directed at restricting inward FDI at the sectoral level (financial services, oil and gas, communications). Welfare economics arguments for and against sectoral foreign ownership restrictions are considered. Original economic models of FDI for Canada are then discussed and case studies are presented of the consequences of foreign ownership and the impacts of foreign ownership policies on the three sectors mentioned above. The final section concludes the report with a summary and a set of policy recommendations.