Unbeknownst to many Canadians, our cities are increasingly selected as desirable destinations for foreign direct investment.
Such inflows to Canada rose by 17 per cent, to $1.5 trillion in 2011, up from $1.3 trillion in 2010. In 2012, fuelled by Chinese oil giant CNOOC’s $15-billion purchase of Calgary’s Nexen Inc., Canada replaced Australia as the lead country in the world for Chinese outward-bound direct investment.
A ramp in Chinese investment interest is particularly significant given the OECD’s prediction that China’s economy will eclipse that of the U.S.A. — Canada’s longtime largest trading partner — as soon as 2016.
It points to a prosperous future. Yet contrary to traditional economic development orthodoxy, that future is best realized by bolstering provincial and federal initiatives with direct city-to-city relationships. While such initiatives by other levels of government set the table, bringing cities to that same table at the outset increases the odds of foreign direct investment success. City GDP numbers help us understand why. The economic lifeblood of the world pumps through the veins of the world’s major cities.
The UN estimates that Seoul accounts for almost 50 per cent of South Korea’s gross domestic product. Budapest (Hungary) and Brussels (Belgium) account for roughly 45 per cent of the GDP of their respective countries. London’s GDP is higher than that of the countries of Sweden or Switzerland, and the cities of Tokyo and New York have an estimated GDP similar in size to Canada’s and Spain’s.
Here in Canada, the economic impact of our cities is also profound. Eleven of Canada’s large cities — Toronto, Montreal, Vancouver, Ottawa, Calgary, Edmonton, Halifax, Quebec City, Winnipeg, Waterloo Region and Saskatoon — accounted for 72 per cent of GDP growth and 90 per cent of the country’s job growth between 2007 and 2012.
Furthermore, in a 2012 report titled The Role of Canada’s Major Cities in Attracting Foreign Direct Investment, Alan Arcand, principal economist at the Conference Board of Canada, stated that “The members of the Consider Canada City Alliance are punching above their economic weight in terms of attracting FDI. Given their importance in attracting foreign investment, cities have a role to play, along with their national and provincial counterparts, when policies to attract FDI are being developed.”
Arcand’s report also stated that “a proactive and co-ordinated effort aimed at attracting FDI could lead to significant benefits, not only for the cities themselves, but for the country as a whole.”
This April, working together as the Consider Canada City Alliance Inc., these 11 Canadian municipalities fulfilled the role advised by the conference board and conducted an investment mission to three Chinese cities. Starting in the former British colony of Hong Kong, then moving to Shenzhen and Beijing, Consider Canada City Alliance members and associated senior executives held some 250 meetings with pre-qualified Chinese companies and government organizations eager to invest and expand here.
These investment meetings were facilitated by representatives from the Department of Foreign Affairs and International Trade’s Invest in Canada team — trade officials who recognize that Canada’s well-regarded brand can and should be meaningfully executed in a city-to-city context.
Our Chinese hosts very much appreciated the fact that we could quickly identify the Canadian city or cities best suited to particular sectors and investment objectives, and among our 31 representatives, instantly assign a point person to move detailed city-based discussions forward at the conclusion of an initial meeting.
Just as Canadian companies strive to establish rubber-meets-the-road relationships in the world’s top trading cities, Chinese companies want to do business with city-based navigators who can quickly, easily facilitate location research, establish R&D connections, and identify specific talent or natural resources attributes.
In Calgary, we well know the impact of foreign direct investment from the East. In the last three years alone, $31 billion of China investment and $53 billion of Asia Pacific investment flowed though Calgary investment banks and companies — a massive and welcome injection into the overall Canadian economy.
China is not the only place in the world with cities keen to establish linkages with their counterparts in Canada. If Canadian entrepreneurs have something to sell or innovation to offer, then effective, productive relationships with the world’s mega-cities will serve to create still more wealth and opportunity for our great country.
Bruce Graham is the chairman of Consider Canada City Alliance Inc. and president and CEO of Calgary Economic Development. www.considercanada.com
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