Is Canada really “too risky” to invest in?

Canada may feel risky, but compared with other countries, it is still one of the safest places to invest and do business

Interview requests

In a world increasingly defined by war, weak rule of law and political instability, Canada stands out as one of the few places where investment, enterprise and daily life are still protected by stability and the rule of law.

Dramatic changes in technology and global resource markets, combined with increasingly reckless rhetoric from the United States, our largest trading partner, have unsettled investors. But uncertainty is not the same as danger, and Canada’s legal and political institutions sharply limit the risks that define much of the world.

It goes without saying that Canada is to be preferred over places experiencing wars and rebellions such as Ukraine, Myanmar and many parts of Africa. More telling is that Canada also compares favourably with countries that are supposedly at peace.

Take Venezuela as an example. When the Trump administration moved against Venezuela’s president through sanctions, diplomatic pressure and support for regime change, it envisioned reopening Venezuela’s oil sector to foreign investment and turning the deeply dysfunctional state that nation had become into a functioning economy. To accomplish this, it imagined that the American oil producers who had been kicked out of Venezuela without compensation would happily come back and invest the billions of dollars needed to restore a functioning oil export industry. Major oil companies showed little interest.

There were many reasons for their hesitancy. Concerns about climate change cloud the long-term prospects for carbon-based fuels. Venezuela’s oil is heavy and sour, making it more costly to extract and use. Guyana, next door, has sweet light oil.

But the biggest reason to hold off putting time and money into Venezuela comes from how the nation operates. The Venezuelan state apparatus, regardless of leadership changes, remains the same one that previously expelled oil companies. The rule of law and a fair justice system are widely regarded as absent. Various gangs and militias threaten public order in parts of the country. There is no guarantee that investments cannot be disrupted or destroyed again. Basic civil freedoms are severely restricted.

Compare this to Canada, which has similar oil deposits on the Prairies. Many people who fled the oil industry in Venezuela now live and work there. They are not planning on going back.

Unlike Venezuela, Canada has the rule of law. Our governments do not decide on a whim to take over a functioning organization, kicking out the people running it and paying nothing for the assets they seize. The Canadian mantra is peace, order and good government. Canada has managed with stability and security for over 150 years.

If the government or anyone else does something that does not seem right, individuals and organizations can turn to a functioning court system, with the right to a fair trial and legal representation. This situation does not exist everywhere. People who are helping new arrivals learn about Canada often have a hard time convincing them that, in Canada, judges do not have to be bribed to obtain fair rulings.

When investors compare Canada with other resource-rich nations, they see these factors. They also see Canada as a good place in which to live and raise a family. The lights stay on, the internet works and the roads remain passable. We enjoy basic freedoms. We can speak freely and live where we choose. Compare this to China, where the state exerts control over the courts, restricts speech and can intervene directly in private enterprise.

The U.S. has historically been as free and stable as Canada, even though it has always had a higher standard of living. But right now, there may be reasons for an investor to prefer Canada. The random, arbitrary announcements by the U.S. president hurt American businesses. Investments are not risk-free when an off-the-wall tariff change can cut supply chains or reduce markets. Perceived arbitrary actions against individuals also make it difficult to attract and retain a workforce and generate an atmosphere of fear.

Canada is not a perfect place to do business. We have multiple layers of government: federal, provincial and local. They do not always cooperate with each other or coordinate their actions. Our tax systems are complex, as are the many rules and regulations imposed on individuals and firms. A level of uncertainty surrounds relationships with First Nations, particularly around land claims, consultation requirements and resource development approvals.

Nevertheless, as we look around the world, there are few places that offer a more stable, secure and pleasant place in which to invest and prosper.

Dr. Roslyn Kunin is a respected Canadian economist known for her extensive work in economic forecasting, public policy, and labour market analysis. She has held various prominent roles, including serving as the regional director for the federal government’s Department of Employment and Immigration in British Columbia and Yukon and as an adjunct professor at the University of British Columbia. Dr. Kunin is also recognized for her contributions to economic development, particularly in Western Canada.