opinion pieces

From Foreign to Global: Does Investment Language Need an Update?

Language matters, even in economics - a field of study often focused on statistics, formulas and models. Words shape how we think about the economy. Terminology impacts how business leaders assess risk and reward.

But language ebbs and times change. And yet, one of the most commonly used terms in economic development—foreign direct investment (FDI) —feels increasingly misaligned with the transaction it is meant to describe.

FDI was born in a different era. It comes out of the post–World War II economic order — a time when economies were more isolated, capital moved more slowly, and corporations had a more national focus. 

But decades later, we’re still using a term designed for a by-gone world. Today’s economy is defined by global supply chains, multinational partnerships and companies that are “local” in more than one country at once.

In fact, according to Invest in Canada, close to 2.5 million people work for global companies operating in Canada. That means one out of every eight Canadians depends directly on FDI for their livelihood. Furthermore, there has been a trend that most investments are coming from global companies already operating in Canada. As a crucial component of our economy, these investments hardly seem “foreign”. The word itself carries connotations of strangeness and unfamiliarity – even unwantedness.  

As such, perhaps it is time to consider a new term: Global Business Investment – GBI - words that better align our terminology with the reality of a globally connected economy. This is not just semantics. Changing the language away from foreign direct investment to GBI places our focus on a truly global economy and investments driven by businesses (not ‘foreign’ organizations) and decisions made for business reasons.

A new term, for a new era, because today’s most important investments are not foreign. They are global.

Alex Fallon, Founder & Chair, WCEF

References:

(https://www.investcanada.ca/news/fdi-101-what-fdi)

Stats Canada reference:  https://www150.statcan.gc.ca/n1/pub/13-607-x/2016001/48-eng.htm