Skip to main content

The Globe and Mail

Canada losing its moniker of being a debtor nation

Signage marks the Statistics Canada offices in Ottawa. A Statscan report shows foreign investment by Canadians surged from 1960 to 2008, especially after Ottawa decided to allow pensions and RRSPs to be invested abroad.


Canada has been a debtor nation for as long as economists can determine, drawing on foreign capital to tap resources and build factories.

It's a history that's charged with emotion. Witness the nationalist angst triggered by the hostile foreign bid for Potash Corp. of Saskatchewan and China's ongoing push into Canadian resources.

But the portrait is changing, concludes a new report by Statistics Canada: Is Canada Losing its Status as a Debtor Nation .

Story continues below advertisement

The country came tantalizingly close to becoming a net creditor nation just before the financial crisis in 2008, following a decade of rapid expansion of Canadian investment abroad.

The reason for the surge appears to be Ottawa's decision to allow pensions and RRSPs to be invested abroad. That, combined with free trade with the United States and China's emergence, created enticing foreign investment opportunities. And Canadians seized them.

The main driver isn't so much Canadian companies buying up foreign assets, but Canadian investors acquiring stocks and bonds – so-called portfolio investment.

The Statscan report tracks the net international investment position. That's the gap between the assets that foreigners hold in Canada and the assets that Canadians hold abroad. Expressed as a ratio, a reading of less then one mean Canada is a debtor country.

And from 1960 to 2008, that ratio surged from less than 0.4 to 0.97, before declining in 2009 and 2010 as Canadians retreated from volatile foreign markets.

From 1951 to 2010, the value of foreign assets owned by Canadians grew at an average of nearly 10 per cent a year. Over the same time period, foreign assets in Canada increased at an average of less than 9 per cent.

The report, summarized from the research paper Canada's International Investment Position, is part of a Statscan investigation of the international dimensions of the Canadian economy.

Story continues below advertisement

Report an error Licensing Options
About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.