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Report: Canada’s strong R&D in universities contrasts with weak investment in business

New CCA report confirms Canada underperforms on most measures of business R&D, but it found pockets of success

By ROSANNA TAMBURRI | AUG 28 2013

An expert panel report examining business investment in research and development acknowledged that a “disconnect” exists between Canada’s strong publicly funded research and development activities at postsecondary institutions and the country’s comparatively weak investment in industrial R&D. But it cautioned against redistributing resources from the former to the latter.

The report was prepared at the request of Industry Canada by a panel of 14 experts assembled by the Council of Canadian Academies, a non-profit group, and released Aug. 28.

The report, The State of Industrial R&D in Canada, noted that compared to other industrialized nations, Canada performs similar amounts of publicly funded research and development but significantly less business R&D. In 2010, Canada ranked seventh among OECD countries when it came to R&D spending in higher education and twice the rate of the U.S. But in terms of business R&D, it ranked 20th, with half the rate of investment as countries such as Finland and Sweden.

“It is not that Canada performs more R&D in the public sector than comparator jurisdictions but that Canada performs less R&D in the business sector,” it said. This implies that Canada needs public policies to encourage investment in business R&D but not a redistribution of resources away from publicly funded research activities.

Kathleen Sendall, chair of the expert panel and a director of Calgary-based Enmax Corp., called it “a common misconception” that high levels of investment in science and technology at Canada’s publicly funded research institutions should lead to high levels of industrial R&D. In a conference call with reporters, Ms. Sendall said it wasn’t part of the panel’s mandate to resolve this seeming “paradox” and that an upcoming, synthesis report by the CCA, to be released in October, will look at the issue in more detail.

However, the report said the relationship between the two is complex and influenced by various factors. It noted that the two types of research are motivated by different incentives, with industrial R&D driven by market needs and publicly funded research by scientific curiosity. “It is not simply a process of taking an idea from a scientific article in a research journal, solving a few engineering problems and rushing it through to production,” the report said.

Still, it acknowledged that some countries have made better use of their publicly funded knowledge base and identified several barriers that limit the transfer of Canadian science and technology knowledge into business innovation and economic prosperity.

Among these are lower rates of growth in patents and licensing agreements at Canadian universities and colleges, suggesting that existing technology transfer processes “are not effective,” the report said. It noted that over the past decade, investment in university research and technology transfer personnel has increased sharply while the number of patents and licensing agreements has increased less dramatically. But the report stopped short of recommending ways to improve the processes.

Ms. Sendall said the panel didn’t examine in detail the role of technology transfer offices. But, she added, the primary mission of universities is the provision of people and ideas. “So therefore it is not surprising that that is a challenging area for them,” she said.

Another barrier the report identified is the comparatively low level of education among Canadian business managers, noting that 35 percent of Canadian managers have a university degree compared to 53 percent of U.S. managers.

The panel assessed various measures of business R&D including spending, patents and scientific publications, and economic outcomes. Though Canada underperforms other nations when it comes to most measures of business R&D, the report also found pockets of success. “The news is not all bad,” said Ms. Sendall. Several Canadian industries, including aerospace products and parts manufacturing, information and communications technologies, oil and gas extraction, and pharmaceutical and medicine manufacturing showed higher R&D intensity than those of other G7 countries. Aside from oil and gas, most research and development activities tend to be concentrated in Ontario and Quebec.

According to the report, spending on industrial R&D in Canada as a share of GDP is about half of what it is in the U.S. and declining. It identified structural factors in the Canadian economy that contribute to gap. It found that some of Canada’s high-tech manufacturing industries, such as semiconductor and computer equipment manufacturing, form a smaller share of the Canadian economy, dragging down the manufacturing industry as a whole. “The declining share of these high-technology manufacturing industries in the Canadian economy in recent years has further exacerbated this effect,” it said.

Ms. Sendall said the report provides one of the most detailed studies on the state of business R&D ever conducted in Canada. It is intended to complement the council’s 2012 assessment of the state of science and technology.

Watch CCA’s video explaining The State of Industrial R&D in Canada report:

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  1. SC / August 28, 2013 at 3:18 pm

    Good article. I hope the revamped NRC may provide better linkages between public-sector and private-sector research without destroying the independence/autonomy of the universities and tri-council funding.

  2. Technology Research / October 4, 2013 at 8:36 am

    Nice Article provided by Rosanna Tamburri.

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