Notch 4 in the STIC – The 30 year old question: Why does Canada lag in R&D spending?

Many reports have been written over the past 30 years about Canada and its R&D spending, and they clamour one after the other about Canada’s relative lack of investment into R&D.  We’ve been through periods of deep cutbacks and periods of very strong growth, yet one thing remains remarkably consistent – Canada underspends on R&D relative to other countries.  The recent STIC document joins these reports and pictorially represents it in this non-flattering line graph:

It seems that Canada (and the United Kingdom for that matter) is unwilling to increase the proportion of money that it spends on the very thing it claims to be critical to its “knowledge economy”.  The latest Industry Canada science and Technology Strategy boasts that research and development is the basis for new discoveries that lead to improved lives, better jobs, and new business opportunities and outlines the need to increase such activity (though admittedly, it mostly pushes the idea of encouraging private investment and plays down the Government’s role)

Of particular note is the decrease in the last 5 years where the % of GDP spent on research and development has actually decreased substantially.

As a share of GDP, R&D expenditures in Canada lag behind the G7 average (Figure 1). From 2006 to 2008, GERD/GDP in Canada dropped from 2.0 percent to just over 1.8 percent.

Some have argued that this recent decrease in R&D:GDP is due to the fact that Canada’s economy has grown, yet countries such as China seem to be investing even more into R&D as their economy grows and the UK has maintained, if not increased, their contribution despite the GDP shrinkage induced by the financial crisis.

So, why is investing more money in R&D apparent anathema to Canadian policy makers and industry leaders who tout R&D as a critical component of economic prowess?  Are we setting ourselves up to fall behind in the knowledge economy through lack of investment or have our researchers found a way to do more with less – (side note: Canadian labs have clearly found a way to produce some of the top research in my own field of stem cell biology, are we ahead or behind in other fields?)  Last year, we brought our readers attention to the Council of Canadian Academies and their report on The State of Science and Technology in Canada which goes through an in depth analysis of which fields Canada is leading and lagging in – perhaps such reports should be cracked open by those who hold the purse strings in order to see if more research in Canada’s R&D might be something worth shelling out for.

Are there already signs of a failing R&D sector?  We’ve commented on rumblings about Canada’s biotech sector’s lack of mid-level positions, but is their R&D at risk as well?  Do troubles in the Canadian business world derive from a lack of investment in building new intellectual property?

How much of Nortel’s fall from grace in the dotcom crash of 2000 (vanquishing 60,000 jobs across the globe) was due to insufficient investment in R&D?   Did Blackberry makers Research in Motion fail to invest enough in novel technologies – are this week’s 2000 job cuts related?  Are these the result of Canada’s lack of investment in research and development?

The waters around such questions are extremely murky and tangible outcomes are tough to identify and quantify when so many factors are at play.  What does seem reasonable though is to ask where this investment gap is filled from in other countries that currently outstrip Canada’s spending – is it public money, private money, foreign money, or domestic money?  Hopefully these questions are being asked and answered before we set forth on another 30 year path of poor relative investment.