Superstar Search: Studying the Current and Potential Populations of Canadian Exporters and Foreign Direct Investors Abroad

Abstract

In this article, we analyze the potential to increase Canada’s exports and foreign direct investment abroad. To do so, we construct a unique administrative dataset containing detailed information for millions of companies that operated in Canada between 2010 and 2015. This allows us first to study the current population of Canada’s exporters and foreign direct investors abroad. Then, using probit modelling and propensity score matching, we infer the potential populations of these firms and examine their observable characteristics. Our estimates suggest there is considerable untapped potential to grow Canada’s outward international activity, with thousands of firms identified as high-potential exporters or foreign direct investors abroad. On a per-firm basis, the initial international activity of potential entrants is likely to be considerably lower because they tend to operate at a smaller scale than companies that are already internationally active—for exporters, less than half the scale, and for outward investors, less than one-tenth the scale.