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The Black Hole

Notch 3 in the STIC: Business expenditures on research & development

BY BETH | JUL 25 2011

In his last posting, Dave mentioned that statistic on Canada’s direct vs. indirect funding really jumped out of the STIC report. Another stat that really jumps out is something known as “Business expenditure on R&D (BERD) intensity.” BERD intensity is “the ratio of business R&D to a measure of output” – for example, business expenditures on R&D compared to the gross domestic product (GDP). This figure shows  where Canada stands on BERD intensity compared to a number of other countries:

While many other countries have increased their BERD intensity, Canada’s has actually decreased. And, as the report points out, this isn’t because our GDP has grown so much, but rather because business expenditures on R&D have decreased in recent years:

Another way of looking at business expenditures for R&D is relative to “business value-added” ((Where “business value-added” is “composed mainly of profits and wages [and] is essentially the business contribution to GDP”)). This metric, which basically amount to how much of a “business’ resources is dedicated to R&D,” also shows that Canada lagging behind:

When broken down by industry, we can see that Canada lags behind the OECD average for BERD-intensity in 8 of the 16 categories:

Taken together, this shows a rather unfavourable trend in Canadian businesses not investing in research & development – i.e, not contributing to innovation. We know from Dave’s last posting that Canada is not very good at contributing direct funds to research and my first posting in this series illustrated that while Canada is pretty good at getting PhDs trained, we are not so good at having jobs for those PhDs once they are done their schooling. Perhaps I’m being overly simplistic here ((It wouldn’t be the first time!)), but doesn’t this suggest that we need some way of encouraging more direct funding of R&D -and encouraging business to increase their investment in R&D – so that government, the academic sector and businesses are willing and able to hire some of those unemployed PhDs to do that R&D? As per usual, I don’t have the answers here, but just thought I’d put that out for some discussion!

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  1. Ghoussoub / July 25, 2011 at 15:45

    STIC analysis is fine but why don’t you pay more attention to R&D issues that are less “abstract”, more concrete and more relevant to young researchers such as yourselves and your readers?
    What do you think of the apparent dismantlement of these programs?

  2. Dave / July 25, 2011 at 16:17

    Professor Ghoussoub,
    We’re definitely not intentionally ignoring the issues relevant to trainees – they are the focus of this blog. Incidentally, we’d actually posted on the recent NSERC results last month.

    However, we really didn’t get into the nitty gritty as you’ve done in your entry and I agree that these numbers may well be the result of the Banting et al. programs – this is one issue that the CAPS group is trying to get it’s head around and something that is clearly impacting the careers and lives of young scientists.
    I’m sure the issues will resurface and hopefully there was enough noise over this year’s results to make some changes in next year’s decisions on resource allocation.
    Thanks for the comment!

  3. Ghoussoub / August 24, 2011 at 14:51

    Thanks Dave! Need to report on what one of your colleagues have found: NSERC’s numbers on postdocs/grads don’t add up.