Public Perceptions of Canada’s Investment Climate

IMF Working Papers, July 26, 2024

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Public Perceptions of Canada’s Investment Climate

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Bibliographic details

• Authors: Flora Lutz, Yuanchen Yang, Chengyu Huang
• Published: July 26, 2024
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9798400284373.001

Study overview

• Title: Public Perceptions of Canada’s Investment Climate
• Authors: Flora Lutz, Yuanchen Yang, Chengyu Huang
• Date: July 26, 2024
• Publication type: IMF Working Papers
• Pages: 40
• Volume: 2024
• Issue: 165
• Series: Working Paper No. 2024/165
• DOI: https://doi.org/10.5089/9798400284373.001
• Stock No: WPIEA2024165
• ISBN: 9798400284373
• ISSN: 1018-5941
• Subjects: Climate finance, Competition, Economic sectors, Environment, Financial markets, Infrastructure, Mining sector, National accounts, Production, Productivity
• Keywords: Canada, Climate finance, Competition, Global, Infrastructure, Investment Climate, investment flow, investmest climate, Machine Learning, Mining sector, muted productivity growth, NLP-based indicator, Productivity, Sentiment Analysis

Research objective and method

• Objective: Measure trends in public perceptions of Canada’s investment climate amid concerns over muted productivity growth.
• Methodology: Development of a new natural language processing (NLP) based indicator by mining Twitter (now X) accounts to capture public sentiment on the investment climate.
• Comparative approach: Construct a similar NLP-based indicator for the U.S. and compare trends across countries.

Key findings

• General assessment:
  • The Canadian investment climate appears to be generally favorable.
• Recent developments:
  • Signs of slippage in some categories in recent periods, notably governance and infrastructure.
• Cross-validation:
  • Slippage in governance and infrastructure is confirmed by both survey-based and NLP-based indicators.
• International comparison:
  • NLP-based indicators suggest perceptions of Canada’s investment climate are similar to perceptions of U.S. investment climate, except for governance.
  • Views of U.S. governance are notably more negative relative to Canada.
• Predictive power:
  • NLP-based indicators are statistically significant in helping to predict investment flows, similar to survey-based measures.
• Additional value:
  • The NLP-based indicator provides nuanced insights and allows identification of specific grievances.

Implications and utility

• Policy relevance:
  • NLP-derived sentiment measures can complement traditional survey-based indicators when monitoring investment climate perceptions.
  • The indicators can help identify category-specific deterioration (e.g., governance, infrastructure) that may warrant targeted policy responses.
• Research and monitoring:
  • Comparable country-level NLP indicators (Canada and U.S.) facilitate cross-country monitoring of public sentiment related to investment climates.
• Practical advantage:
  • NLP-based indicators reveal granular grievances in public discourse that surveys may not capture.

IMF Working Paper by Flora Lutz, Yuanchen Yang, and Chengyu Huang (July 26, 2024).

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