As governments worldwide eye pension funds as a source of FDI, Canada's inquiry highlights the tension between international investments and domestic economic growth. by FDI Intelligence, Danielle Myles
The Canadian pension funds’ groundbreaking approach to making significant investments abroad is likely to persist despite a government inquiry driven by local business leaders pushing for more domestic investments. This conflict highlights a broader global issue where public and private sectors are vying over how to allocate substantial retirement savings, especially given the global competition for institutional capital and the role of pension funds in foreign direct investment (FDI).
As more governments worldwide recognize institutional investments as a vital source of FDI, the debate over the allocation of pension fund capital has intensified. In March, a group of 92 Canadian business leaders issued an open letter urging the government to encourage the country’s pension funds to invest more within Canada. In response, the government has initiated a working group to explore ways to boost domestic investment opportunities in areas such as infrastructure, real estate, and start-ups.
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