Despite being relatively few in number, multinational enterprises exert a significant influence on the Canadian economy. In 2018, multinational enterprises (MNEs) operating in Canada contributed to more than one-third of all jobs in the corporate sector, half of gross domestic product (GDP) and nearly 60% of all investment in the form of machinery and equipment, non-residential construction and intellectual property products.
The corporate sector accounted for more than two-fifths (43.5%) of the total 6.4 million enterprises in Canada in 2018. Since 2010, the earliest year for which data are available, MNEs have constituted approximately 1% of all enterprises in the corporate sector. The number of Canadian MNEs rose to 11,490 in 2018, while foreign MNEs edged down to 16,256.
Canadian multinationals also have a significant presence in foreign markets. In 2018, the number of people employed by Canadian majority-owned affiliates abroad reached 1.6 million, a 7.4% increase from the previous year. This was largely attributable to merger and acquisition activities. In comparison, employment by Canadian MNEs in Canada posted an increase of 0.4%, reaching 2.1 million workers. Overall, employment by Canadian MNEs totalled 3.6 million, with over two-fifths (42.9%) located abroad, a share that has been increasing since 2011 (36.1%).
Multinationals play a large role in Canada’s trade in goods and services
Total Canadian international merchandise trade climbed by 7.0% to $1.1 trillion in 2018. Multinationals were responsible for nearly two-thirds of the increase. Similar to the previous year, foreign (64.0%) and Canadian (18.0%) multinationals together accounted for 82.0% of total merchandise exports and imports.
Compared to merchandise trade, MNEs represented a slightly lower but still substantial share of Canada’s commercial services trade. Nearly three-quarters of all commercial services exports and imports were related to activities of multinationals in 2018.
The Canadian economy comprises the corporate sector (broken down between foreign MNEs, Canadian MNEs and non-MNEs in this release) and the non-corporate sector. The following analysis refers to the contribution of multinationals within the Canadian corporate sector only.
Capital investment under foreign control up in central provinces but down in Western provinces
In 2018, foreign MNEs operating in Canada invested $60.6 billion in machinery and equipment, non-residential construction and intellectual property products, with over half (51.0%) by affiliates ultimately controlled by the United States. The next highest source of this type of investment was from Canadian affiliates under European control ($14.7 billion), followed by affiliates controlled from Asia and Oceania ($11.7 billion).
Strong growth in employment at affiliates of Canadian multinationals abroad
From 2017 to 2018, employment by Canadian multinationals, both in Canada and through their majority-owned affiliates abroad, increased by 115,000 to 3.6 million. Of these jobs, 57.1% were in Canada, while the rest were located abroad.
Employment at Canadian majority-owned affiliates abroad was up for the seventh consecutive year and accounted for 93.2% of the worldwide increase by Canadian multinationals in 2018. Overall for 2018, Canadian majority-owned affiliates abroad in the services sector added 62,700 jobs due to higher employment levels in the finance and insurance sector (+25,300), retail trade sector (+23,400), and the professional, scientific and technical services sector (+21,600). Meanwhile, affiliates abroad in the goods sector posted an increase of more than 44,100 jobs, led by manufacturing (+34,500).
For domestic employment by Canadian multinationals, the increase of 7,800 jobs in 2018 reflected growth in the finance and insurance (+52,300) and mining, quarrying, oil and gas extraction (+20,700) sectors, but was moderated by a decline in manufacturing (-30,000) and retail trade (-29,900).
Sales of Canadian multinationals up with faster growth from affiliates abroad
Worldwide sales of Canadian multinationals were up 4.0% to $1.8 trillion in 2018, with affiliates abroad responsible for nearly two-thirds of the increase. Canadian majority-owned affiliates abroad generated $733.5 billion in sales in 2018, up 6.3% from a year ago. On a sectoral basis, sales by affiliates of Canadian multinationals abroad in the goods-producing sector rose 10.3%, led by the manufacturing and mining and oil and gas extraction sectors. For the services-producing sector, sales by affiliates abroad increased by 2.9%, led by the retail trade sector. Domestic operating revenue by Canadian multinationals grew at a slower pace, up by 2.5% to reach $1.0 trillion in 2018. Within Canada, the services sector led the increase in sales.
Source: Statistics Canada