National and regional factors in the foreign direct investment decision: the case of canada

This paper examines the location decision of foreign investors in Canada. Their motives are surveyed on the country level and on the regional level. The results on the national characteristics are comparable to previous studies; firm motivations are directly related to profitability concerns. We do note that there are some differences across industries and country of origin, but not by competitive advantage. When choosing a specific location within Canada, firms seek to be in close proximity to customers. The analysis further indicates that cost of production is an overriding concern independent of how the data are analyzed. These costs are apparent in an ex post facto evaluation of the investment. Firms investing in Canada see taxes and political stability as overriding concerns.