The information technology (IT) sector has achieved several significant applications in many of today's products and techniques and is increasing affecting the service sector. Worldwide information grids and telematics are developing rapidly by multinational enterprises (MNEs) allowing them to offer an increasing number of services at declining costs via the realization of economies of scope. MNEs by centralizing the collecting, processing, and transmitting functions of information are able to increase their competitiveness. Canada, a traditional recipient of foreign direct investment, may be adversely affected by the development of information grids. The pros and cons of public policies aiming at both attracting multinationals with world product mandates and fostering R&D activities by domestic firms are critically examined. It is concluded that Canada's information technology sector performs quite well if it is compared to the performance of the Canadian economy as a whole but it performs poorly at the world markets. The formation of industrial clusters may be a policy option which is worth to be examined carefully.