Corporate investment in Canada has fallen dramatically in the past year. Some people would say it's because corporations aren't making profits. But that's not really true.

Canadian corporations earned $54.1 billion in operating profits in the third quarter, up 7.9 per cent from the previous quarter, reports Statistics Canada. Profits in manufacturing, mining and other non-financial industries rose 10.4 per cent to $41.7 billion and 18 out of 22 sectors reported higher profits.

Yet productive investments remain in the tank: corporate spending on buildings, machinery and equipment fell by one in the third quarter, bringing the fall in investment in the goods-and-services-producing sectors over in the past year to 14.8 per cent. That helps explain Canada's stubbornly-high unemployment, which remained at 8.5 per cent in November. And the latest StatsCan data shows Canadian industry is operating at just two-thirds of capacity.

So where are those profits going? In part, the answer is "offshore." Canadian companies continue to export massive amounts of the profits their employees produce for them, investing them in their foreign operations or in global financial markets. In spite of the recession, Canadian companies have continued to steadily increase what they spend outside Canada. Since the end of 2005, Canadian corporations' direct investments offshore rose by a third, from $452 billion to $601 billion. Their foreign financial holdings increased even more; foreign bond holdings are up by nearly half, stocks by 33.6 per cent and bank deposits -- many in cozy offshore tax havens -- have grown by three quarters.