Data check: Canadian business proves a bad R&D partner

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Research and development should be a partnership between business, universities, and government. The latest data on Industrial Research and Development have now been released by Statistics Canada, and it shows that business is letting down its side of the deal.

Canadian business spending on research and development activities is expected to be at its lowest level in 2014 than at any point since 2004. Once inflation is taken into account, it will be at its lowest point since 1999, and down 20 per cent since its peak in 2006.

The trend is bleaker if business expenditures are measured as a proportion of economic activity, or ‘intensity’. If private sector forecasts for Canada’s economy bear out, industrial R&D will be thirty per cent lower than it was in 2006. It will also be lower than at any time since Canada began emerging from the recession of 1990-91.

Meanwhile, the trend in the average intensity of industrial R&D for the Organisation for Economic Cooperation and Development appears to be headed in the other, upward, direction – despite the drag from Canada’s performance on this measure. Canadian business is falling behind, sitting on cash reserves while expecting universities and governments to pick up their research slack.

Sources: Statistics Canada, Industrial Research and Development: Intentions 2014
Department of Finance, Canada, June 2014: Department of Finance Private Sector Survey

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