The Canadian economy has been a net recipient of foreign direct investment (FDI). The free-trade agreements (FTA and NAFTA) have had to attract more inward FDI. The purpose of this paper is to analyze the impact of variables, such as, market size, labour costs, openness trade, and economic stability. The manuscript applies a static and dynamic panel data approach (Fixed Effects estimator and GMM system estimator). The empirical results indicate that the market size, openness trade are significant factors to explain inward FDI into Canada . The wage and taxes are also statistically significant.

Keywords: Foreign direct investment, panel data, Canada .