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Investment Attraction:
Learning from “Best
Practice” Jurisdictions
The views expressed in this study are our own and should not be attributed to any other individual or
organization. We are grateful to our Attracting Global Mandate Project partners, Canadian Council of Chief
Executives, Canadian Imperial Bank of Commerce, Industry Canada, IBM Canada and Ontario Ministry of
Economic Development, Employment and Infrastructure for their support, and to the senior executives of
the firms and governments who participated in the structured interviews. .
Introduction and Overview
A core recommendation from CEOs of successful Canadian firms is that all
players in Canada need to raise their game in investment attraction, learning
lessons from best-practice jurisdictions starting with the best in class: Mexico.
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The five jurisdictions that we to the NAFTA market, which governmental collaboration
selected — the United States represents approximately US$21 can function and can positively
(the federal government and trillion in annual GDP (28 percent impact a foreign company’s
the state of Utah), Mexico, of the global economy) and a investment experience.
Singapore and Hong Kong — differ projected consumer base of
considerably from Canada in one almost 500 million people by 2020. Singapore and Hong Kong are
or more of the following areas: All three have federal forms of fundamentally different from
size, structure of the economy, government, albeit with important Canada in that their economies
government structure and level differences regarding the vesting and landmass are only a fraction of
of development. Despite these of specific powers at each level of Canada’s in size, their economies
differences, each jurisdiction government. The United States and are much more heavily weighted to
provides relevant lessons on Mexico also aggressively attract the service sector, and they possess
successful investment attraction. investment to many of Canada’s highly centralized governments.
most active industrial sectors, However, their consistent success
The United States (whether such as auto assembly, aerospace in capturing investment mandates
nationally or the state of Utah) and pharmaceuticals. The steps in an intensely competitive region
and Mexico share certain key that these two countries have provides interesting insights
characteristics with Canada taken in coordinating the efforts into how Canada’s investment
and compete directly on that and communication between attraction efforts could operate in a
basis. Most notably, all three various levels of government yield more streamlined, efficient manner.
countries offer direct access important lessons on how inter-
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In order to develop a detailed both have websites that provide First, and most important, there
“process map” and assessment of a growing range and depth of must be a clear, shared and strategic
the current federal and provincial information to potential investors, approach to FDI attraction. This
approach to attracting FDI to and over the past three years they approach needs to be rooted
Ontario, we worked closely with have enhanced and formalized in ongoing analysis of the value
federal and Ontario officials at the some key aspects of how they proposition for FDI — not only top-
Deputy Minister and Assistant work together. down at the Canadian and Ontario
Deputy Minister levels, as well levels, but also bottom-up, industry-
as staff from Industry Canada Nonetheless, Canada’s approach specific and supply chain-by-supply
(now “Innovation, Science and to FDI attraction today falls well chain. Such analysis needs in turn
Economic Development Canada”), short of ensuring that reliable, to be both data-driven and rooted
the Department of Foreign Affairs, timely and tailored information in consistent, on-the-ground
Trade and Development (DFTAD; on key investment decision engagement and dialogue with firms
now “Global Affairs Canada”), the parameters is both widely already working in Ontario. It is also
Federal Economic Development available and communicated crucial to involve local “economic
Agency for Southern Ontario, and to targeted decision-makers as development organizations,” as well
Ontario’s Ministry for Economic part of coordinated, ongoing as colleges and universities that
Development, Employment and strategic engagements, and that produce skilled graduates, train
Infrastructure (MEDEI). This organized, end-to-end assistance existing and new workers, and serve
analysis was supplemented by an is proactively provided throughout as R&D partners.
investigation of publicly available prospective investors’ processes
information through select federal of due diligence, approvals • T
he front end of our FDI
and provincial websites. and applications. strategy is seriously lacking in
analysis that would inform a
Three key gaps were identified targeted pitch to firms. Neither
Assessment in our analysis of Canada’s economy-wide nor sector-wide
status quo. These gaps must be value propositions are what our
Many of the key building blocks
addressed if we are to match or competitor governments rely
needed to attain best-in-class
surpass competing, best-in-cIass on, nor are they adequate in
performance by the Governments
jurisdictions. Best practice can meeting the information needs
of Canada and of Ontario are
be defined as all three levels of a firm assessing a global list of
already in place. For example,
of government working in a competing investment sites. We
the Trade Commissioner Service
coordinated fashion to combine a did not see regular engagement
of Canada within Global Affairs
strong analytical foundation with of the specialized knowledge
Canada and Ontario’s MEDEI both
an end-to-end customer service resources that do, in fact, exist
have clear mandates to attract
orientation — and our assessment across our governments and
FDI, both have staff based in key
is that Canada and Ontario are not are key to developing such
markets around the world (as
performing at that level. targeted strategies. To place
well as in various Ontario cities),
.
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Recommendations
for Success
In this final section, we focus on The strategy should be industry- c. Using federal programs, where
three concrete recommendations specific and ultimately firm- appropriate, to aid the province
for how to improve outcomes of FDI specific, recognizing the different in developing customized
attraction. The joint goal of Canada characteristics, for example, of auto investment-attraction offers.
and Ontario — indeed, of every assembly versus pharmaceutical
province — should be to improve to manufacturing. It should also The provincial role should include
the point of matching (and aiming explicitly design its outreach and the following responsibilities:
to surpass) their best-in-class attraction efforts so as to pursue a. Establishing and chairing a body
competitors, such as ProMexico. opportunities for existing and new to coordinate all investment-
firms. Finally, investment attraction attraction activities related
strategies should be a sustained to the province, and sharing
Explicit joint strategy
priority, backed by adequate human all relevant information with
Ontario and Canada should and financial resources federal departments and among
develop an explicit joint strategy provincial and municipal officials.
that identifies, in detail, the kind of b. Developing and implementing
Well-defined roles
investments they want to attract the provincial strategy, in
to Ontario, the resources required The roles of all parties involved collaboration with the federal and
to implement this strategy and a should be explicitly defined so as to local governments, including the
critical path to achieving their goals. provide clarity, minimize duplication development of key marketing
and promote effective collaboration. materials and websites.
Governments’ orientation should A formal coordination mechanism c. Using provincial programs to
parallel that of private sector should be established, chaired by develop customized investment
investor/business partners: to the province and include all relevant attraction offers in collaboration
earn an attractive return for federal, provincial and local actors. with federal and municipal/
taxpayers by increasing the tax regional governments.
base, and therefore tax revenue, The federal role should include the d. Providing potential investors with
at current tax rates. Potential following responsibilities: one-stop shopping “concierge
investments should be evaluated, a. Participating as a member in the service” for investment
communicated and transparently coordinating body, and sharing information, offers and
monitored on that basis. all relevant information with implementation.
provincial officials and among
Investment attraction goals should federal departments.
be grounded in the province’s b. Assisting in the development
specific competitive advantages, and implementation (especially
and should recognize the federal internationally via Canada’s
government’s need to be even- embassies and missions abroad)
handed in its treatment of all of the provincial strategy.
provinces.
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