The pandemic has highlighted the importance of many things including investing in research and development (R&D) activities. From vaccines to digital solutions, R&D drives innovation and product development.

The latest numbers on R&D spending from Statistics Canada suggest Canada is going in the wrong direction in this regard.

In 2019, gross expenditures on research and development (GERD) in Canada came to $36.8 billion. About 42 per cent of this was provided by the business sector, 24 per cent by government, 20 per cent by the higher education sector, 9 per cent by foreign funders and 5 per cent by the private non-profit sector.

On the one hand, this is a substantial amount of money. On the other hand, it is only 1.59 per cent of Canada’s annual GDP. What’s more, the GERD-to-GDP ratio (a.k.a. R&D intensity) has been falling over the last 20 years, peaking at 2.02 in 2001.

Tellingly, R&D spending in Canada is well below many of our international peers. As of 2017, Canada was ranked 20th out of the 37 Organisation for Economic Co-operation and Development countries when it comes to its R&D intensity. Israel, South Korea and Sweden top the list.

Admittedly, GERD and R&D intensity are somewhat blunt measures. With that said, they still provide a general sense of both the amount and direction of R&D investment in Canada and other countries.

On both fronts, especially given the intensifying global race to create and keep the good jobs and economic prosperity linked to the Fourth Industrial Revolution, Canada could, and arguably should, be doing better.

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