Reality check: Universities can’t pick up the R&D slack from business

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It might be overstating the case for the Globe and Mail’s Konrad Yakabuski to “blame business” for Canada’s poor showing in research and development (R&D). But it is also becoming increasingly clear it makes little sense to demand universities and university researchers to become more business-like and pick up the entrepreneurial slack. As we noted a couple of weeks ago, the level and intensity business R&D is in steady decline. The trend, Yakabuski observes, is despite the relatively high level of government support for R&D.
According to the Organisation for Economic Cooperation and Development (OECD), Canada ranks 19th out of 31 countries in terms of business expenditure on R&D. That is despite Canada ranking sixth in government support, including more than two and a half billion dollars or so in federal R&D tax credits earned by business annually.
Even as the federal government is revisiting its R&D tax credit, it continues to drive university research funding down the path of increased university-business research ventures and research commercialization. Once projected GDP inflation (1.3 per cent) is taken into account, the Main Estimates for the “Tri-council” agencies that fund most university sponsored research show that funding specifically earmarked for business-oriented research is on the rise. Support for other research has declined. The amounts diverted may seem trivial, for now; the long-term importance of this shift is not.
The Council of Canadian Academies has assessed the state of business R&D for the federal government. They found and explained an apparent paradox: business under-invests in R&D, but university-based research continues to perform well. The authors are clear that innovation in Canada depends on business investment in R&D. So, pushing universities to push business research doesn’t work. Rather, the Council echoes the sentiments of Roger Miller and Marcel Côté and encourages government to let universities pursue their strengths:
“Their most important role in local development is not generation of new knowledge, but their ability to attract talent and, through that talent, to disseminate leading-edge knowledge in the local economy. But to attract the best and brightest and properly train them, they need to conduct leading-edge research. So universities should continue to orient their research toward the pursuit of Nobel prizes and peer-review publishing and in the process expose their students to leading-edge ideas. This is what they’re good at.”
Council of Canadian Academies, Paradox Lost: Explaining Canada’s Research Strength and Innovation Weakness; The State of Industrial R&D in Canada
Department of Finance Canada, Government of Canada Tax Expenditures
Roger Miller and Marcel Côté, Innovation Reinvented: Six Games That Drive Growth. Toronto: University of Toronto Press. 2012.
Organisation for Economic Cooperation and Development, OECD Science, Technology and Industry Scoreboard 2013
Treasury Board of Canada, Government Expenditure Plan and Main Estimates
Konrad Yakabuski, If BlackBerry is sold, Canada faces an innovation vacuum, The Globe and Mail, August 17, 2013

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