The latest release of research and development (R&D) statistics from Statistics Canada is further confirmation that business and federal government spending continues to decline. The data should raise some alarm bells in light of Rivka Carmi’s and Martha Crago’s timely op-ed about the importance of university-based basic research to the innovation agenda proposed by business and government.
The data show that, before inflation, this year’s business and federal expenditures are expected to fall, by one and seven per cent respectively. After forecast inflation is included, the decline will be more like three and nine per cent. Measured as a share of forecast gross domestic product, the decline looks even worse – five and eleven per cent. The picture is not quite so dire for the funding they provide to other research agencies such as universities, but even these increases in R&D expenditures are still less than anticipated inflation or economic growth.
Universities have been more consistent performers. The modest upward trend in inflation-adjusted university contributions to R&D may, however, be in the midst of a reversal. Universities inevitably are affected by declines in real funding from major sponsors like the federal government and business. About 45 per cent of university research is funded internally (estimated by Statistics Canada using a formula based on expenditures on faculty salaries). This leaves 55 per cent of research funding dependent on external sources. If intentions and forecasts are borne out, this means university research expenditures will decline in real terms for the second consecutive year.
Finance Department, Canada, Department of Finance Survey of Private Sector Economic Forecasters, June 2014
Statistics Canada, Spending on research and development, 2014 (intentions); CANSIM Table 380-0064 Gross domestic product, expenditure-based, quarterly; CANSIM Table 380-0102 Gross domestic product indexes, annual (2007=100)