Canada

The answer is money. These foreign grads come from countries that are flush with oil money and their governments pay Canadian hospitals to train them, and get more for doing so then the government pays for domestic residents. The result is a win-win for hospitals here. They get labour of extra residents and make a profit. These residents typically go back to their home countries afterwards.

At the same time, they do use training capacity that could be used for domestic grads. However the government is reluctant to fund additional spots because they cost money. The government would also have to open more med school spots which also costs money. The losers are Canadian grads and the public since we train less doctors that stay in the country.

You need Canadian med students to fill Canadian residencies, so medical schools need the resources to expand their intake, which relies both on convincing many conservative provincial governments to provide more funding to keep the already exorbitant tuition at a similar level, and having more people willing to teach in med school, which often means giving up some of their practice.

In my opinion, there is a vast supply of people who want to become doctors, but the very limited spots that med schools have lead them to create extremely obtrusive barriers to entry to limit their intake to who they think are the best, the succes of which is questionable at best.

It's fairly clear that standardized tests aren't an indicator of success in a profession, even grades at the undergraduate level can arguably be said to be an indication of how well one is at test writing. Intake, at least at the university near me, is also based on an in-person interview with poor scoring metrics, often conducted by later year med students or residents rather than practicing doctors.

I don't think the issue is a multitude of rich foreigners essentially paying for residency spots. The system is so dysfunctional they wouldn't even know where to send the money. Look to where the journey of becoming a doctor starts, and you'll find universities with limited resources using outdated intake practices to artificially limit the ones they accept into medical school, creating a bottleneck right at the very start of the process. There aren't a lot of Canadian graduates going unmatched to residencies, there are a lot of residencies open to foreign grads because we don't produce enough Canadian grads to fill them.