The US is a top centre for tech innovation but Canada is increasingly catching the eye of IT and start-up firms, as well as investors.

Innovation and Industry 4.0 are changing geographic patterns of tech investment and blurring sectoral definitions of FDI, as firms in all industries increasingly describe themselves as 'technology firms'. For now, however, there are some strong patterns in the FDI data regarding tech-related investment.  

First and foremost, it is notable that year after year, software and IT services is the sector that leads all others in total number of FDI projects globally – and by a wide margin, according to greenfield investment monitor fDi Markets. Tech FDI does not generally carry price tags with the multibillion-dollar investments that come in the oil, gas, steel and durable goods manufacturing sectors. Yet there are more than 2300 FDI projects annually in the tech sector. And as shown in the latest Global Startup Ecosystem Report 2019 by the Startup Genome, tech investments are becoming increasingly specialised in nature, and geographically distributed. The changing geography of tech FDI will be something to watch as globalisation and national policies shift.  

In North America, it is no surprise that the US has been the largest recipient of FDI in software and IT services over the past 15 years, followed by Canada, and then Mexico with lower, and more sporadic, FDI levels. However, the US does not attract 11 times the number of foreign investment projects as Canada – which would be proportionate to their respective GDPs – but only four to seven times. And in the past four years, software and tech FDI projects have surged in number in Canada and Mexico, whereas US inbound tech FDI has been steady or declining in total project numbers.   

Technology investments are less impacted by trade agreements and tariff threats, so foreign tech firms are less compelled to invest in the US due to White House trade actions. Moreover, Canada’s determined efforts to attract and welcome highly skilled immigrants and international students has put wind into the tech industry’s sails. That, along with ambitious efforts by governments, academia and the private sector to create unique and valued tech clusters in Montreal, Toronto, Waterloo, Vancouver, Edmonton and elsewhere are lifting the tech sector and certainly drawing the attention of global software and IT firms.  

The US remains a dominant tech innovation environment and has more top-performing start-up ecosystems than any other country. Challengers and niche specialists are emerging, moreover, so North America’s tech leaders will need to remain sharp.

Gregg Wassmansdorf is senior managing director, consulting, at Newmark Knight Frank, a global real estate services firm. He is a member of the Site Selectors Guild. E-mail:

This article is sourced from fDi Magazine
fDi Magazine

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