Report Highlights Canada’s Industrial R&D Strengths

Canadian industries continue to underspend in R&D compared to peer countries
By Omid Ghoreishi, Epoch Times
September 3, 2013 1:12 am Last Updated: September 3, 2013 1:14 am

A report on Canada’s industrial R&D says that although the nation’s overall performance is weak compared to peer countries, there are several key industries in which Canada has substantial R&D strength.

The report was compiled at the request of the federal minister of industry by an expert panel from the Council of Canadian Academies (CCA), a non-profit organization whose member academies include the Royal Society of Canada and the Canadian Academy of Engineering, among others.

According to the report, Canada’s four key industries of R&D strength include aerospace products and parts manufacturing, information and communication technologies, oil and gas extraction, and pharmaceutical and medicine manufacturing.

These industries account for a substantial share of the total industrial R&D (IR&D) in Canada, measured by levels of R&D expenditures, patents and scientific publications, innovation and other economic outcomes, or a mix of these factors.

Most IR&D activities tend to be concentrated in Ontario and Quebec, with the two provinces accounting for about three-quarters of total R&D expenditures in the four key industries of R&D strength.

About three-quarters of activity in the aerospace industry R&D occurs in Quebec, with the remainder in Ontario. The information and communication technologies R&D activity has the highest presence in Ontario, with some notable presence in Quebec and B.C.

The regional distribution of the oil and gas R&D activity was hard to determine for the panel because of data suppression to protect firm anonymity, but patenting activity shows that the majority of R&D activity in this sector occurs in Alberta, with B.C. also accounting for substantial activity.

Most of the pharmaceutical R&D happens in Ontario and Quebec, followed by B.C.

According to a report by Toronto-based RE$EARCH Infosource, Canada’s greatest IR&D spenders in 2012 were Research In Motion, Bombardier, and Bell Canada.

Low IR&D Expenditure

According to the CCA report, the Canadian business sector spends little in IR&D compared to peer countries, and Canada’s expenditures expressed as a share of the GDP is now roughly the half of the U.S. level, and declining.

The IR&D intensity gap between Canada and the U.S. is largely because of the low IR&D intensity in Canada in the high-tech manufacturing sector such as semiconductor and computer equipment manufacturing, the report says.

Compared to other countries, IR&D in Canada is relatively personnel intensive and less capital intensive, and fewer large firms in Canada undertake IR&D activity than in countries that are highly IR&D-intensive. To take advantage of the economies of scale in IR&D, the report suggested that larger firms may be needed to bring the successes of smaller firms to a broader market.

In certain industries, however, Canada spends more resources on R&D than other G7 countries. These industries include communications equipment manufacturing, office and computing machinery manufacturing, coke and refined petroleum products manufacturing, and pulp and paper.

Also, many industries in Canada that traditionally don’t spend as much on IR&D have either increased or maintained their IR&D expenditures and intensity in recent years, such as oil and gas extraction and pulp and paper manufacturing.

The impact of Canadian patents also seems to be high, with Canada having the 12th highest rate of patents granted in the world, and Canadian patents being cited in other patents about 20 percent more than the world average.

Canada accounts for 1.1 percent of patents filed in Europe, Japan, and the U.S., and is also responsible for about 4 percent of the world’s scientific journal articles.

Greg Rickford, Canada’s minister of state for science and technology, said the report identifies Canada’s areas of strength, and that the ministry will be reviewing the report in more detail.

“Private sector leadership will be vital to further leveraging our country’s potential in R&D,” Rickford said in a statement.