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Liberalizing Foreign Direct Investment Restrictions in Canada: A Multi-Country Computable General Equilibrium Analysis

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  • Mérette, Marcel
  • Georges, Patrick
  • Dissou, Yazid

Abstract

This paper develops a multi-country multi-sector static general equilibrium model to assess the economic effects of liberalizing FDI restrictions in Canada, either unilaterally, bilaterally (with the US), or multilaterally. From a strict economic point of view, removing barriers to inward FDI could reap great benefits to all regions of the world, and in particular to the ones in which the restrictions are initially severe. Our simulation results show that the benefits of fewer restrictions on FDI stem mainly from a better resource reallocation across the world and an increased capital stock in foreign-owned firms accompanied by a positive spillover effect on total factor productivity. Up to 80% of the welfare increase resulting from liberalizing FDI restrictions is due to increased total factor productivity.

Suggested Citation

  • Mérette, Marcel & Georges, Patrick & Dissou, Yazid, 2008. "Liberalizing Foreign Direct Investment Restrictions in Canada: A Multi-Country Computable General Equilibrium Analysis," Conference papers 331743, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331743
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    File URL: https://ageconsearch.umn.edu/record/331743/files/3917.pdf
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    Cited by:

    1. Patrick Georges & Marcel Mérette & Qi Zhang, 2012. "Toward a North American Security Perimeter? Assessing the Trade and FDI Impacts of Liberalizing 9/11 Security Measures," Working Papers 1204E, University of Ottawa, Department of Economics.

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