Data check: Business investment in R&D continues to fall

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For those who track research funding in Canada, the news from a recent Statistics Canada release about business enterprise research and development (BERD) is depressingly familiar. Canadian businesses are expected to spend two and a half per cent less on research and development this year than they did last year. Because the 2015 inflation rate for Gross Domestic Product (GDP) is forecast to be negative, the “real” decline will be “only” two per cent.

With one exception, the real level of BERD in Canada has been in declining every year since 2006. If spending intentions and economic forecasts are borne out, it will have fallen 19 per cent over the course of the past decade. As a percentage of GDP, the downward trend in BERD expenditures has been steeper – dropping 30 per cent over the same period.

The latter trend left Canada fourth from the bottom in R&D expenditure among advanced economies in 2013. On its own, Ontario would fare better in the ranking, but would still do no better than fifth from the bottom. In Canada, only Quebec businesses spend more as a percentage of GDP, even after the province’s relatively more generous provincial tax expenditures for scientific research and experimental development are taken into account.

Sources:
Canada, Department of Finance, Department of Finance Survey of Private Sector Economic Forecasters
Ontario, Ministry of Finance, Ontario Economic Outlook and Fiscal Review –  Transparency in Taxation
Québec, Ministère des Finances du Québec, Publications – Dépenses fiscales
Statistics Canada, Industrial Research and Development: Intentions; Provincial and territorial economic accounts, 2013

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