This chapter examines the contribution of foreign direct investment to productivity, innovation and the integration of the Canadian economy into global value chains. It analyses productivity differences between foreign and domestic firms and the extent of value chain linkages between foreign multinationals and Canadian firms, an important channel of productivity spillovers. It also assesses the role of foreign firms in innovation and the local capacity of domestic firms, particularly small and medium-sized enterprises to benefit from the diffusion of knowledge and technology brought by FDI.