Spending on research and development, 2018 (final), 2019 (preliminary) and 2020 (intentions)

Released: 2021-03-17

Canada's gross domestic expenditures on research and development (GERD) totalled $37.5 billion in 2018 ($34.7 billion in 2012 constant prices), up 3.8% from the previous year. This was the highest level on record in both current and constant prices. Over half of the gain was due to an increase in spending on research and development (R&D) performed by the higher education sector, which rose 5.2% to $15.1 billion. The business enterprise sector reported the second largest increase in 2018, with spending up 2.6% to $19.5 billion, representing over a third of the total growth.

Business enterprises continue to be the largest funders and performers of R&D in Canada

R&D funding comes from seven sectors: the federal government, provincial governments, business enterprises, higher education, private non-profit organizations, provincial research organizations, and the foreign sector. In 2018, R&D expenditures rose on a year-over-year basis in all seven funding sectors. This was also the second consecutive year during which R&D expenditures grew in all six domestic funding sectors.

The business enterprise sector, the largest funding sector since 1985, spent $16.0 billion in R&D in 2018, representing 42.7% of total GERD funding. Higher education (19.8%) accounted for the second largest share of total spending, followed by the federal government, at 18.3%. The foreign sector, which had reduced its R&D funding by 15.4% (-$582 million) in 2017, reported a 9.0% (+$286 million) rebound in 2018, and, as a result, the sector represented 9.3% of total GERD funding.

From a performance perspective, R&D performance continued to be concentrated in the business enterprise (52.1%) and higher education (40.3%) sectors, which together accounted for over 92% of GERD in 2018.

Chart 1 
Funding and performing expenditures on research and development, by sector, 2018 (final)

Businesses and higher education institutions primarily fund research within their own sectors

In 2018, all of the R&D funded by the higher education sector ($7.4 billion) and provincial research organizations ($6.0 million) was performed within those respective sectors. Similarly, 92.2% ($14.8 billion) of the R&D funded by the business enterprise sector was performed within that sector, with nearly all of the remainder performed by institutions in the higher education sector. However, R&D funding by a particular sector is not necessarily always performed by that sector. Institutions in the higher education sector performed significant R&D using funds from other sectors as well, accounting for 52.3% ($3.6 billion) of federal government funding, 65.3% ($1.2 billion) of provincial government funding, and 82.3% ($1.5 billion) of private non-profit funding. Comparatively, over 95% of foreign funding was performed by the business sector.

Canada's R&D intensity is stable

R&D intensity refers to the ratio of a country's R&D expenditures to gross domestic product (GDP). Users can use this ratio to compare data between countries and over time, regardless of currency. Compared with the previous year, Canada's R&D intensity ratio was unchanged, at 1.7% in 2018. The ratio has been edging downwards since its high of 2.0% in 2001.

In 2018, Canada's R&D intensity ratio was ranked 18th among the 34 Organisation for Economic Co-operation and Development (OECD) member countries that had reported data for 2018, and 6th out of the G7 countries, above Italy. Compared with other G7 countries, Canada had the largest percentage of GERD performed in the higher education sector, 18 percentage points higher than the next G7 member. Canada also reported the lowest percentage of GERD performed in the business sector, at 12 percentage points below the G7 member with the second-lowest share.

Ontario and Quebec account for most R&D expenditures

Ontario had the largest R&D expenditures in 2018, representing 44.3% ($16.6 billion) of GERD expenditures in Canada, followed by Quebec (25.6%), British Columbia (11.9%) and Alberta (9.2%). These four provinces accounted for 91.0% of all GERD expenditures. While overall R&D expenditures (a combined total of all R&D sectors) increased in these four provinces, Quebec was the only province to see a decrease in both R&D performance and funding by the business sector from the previous year.

Natural sciences and engineering continue to represent the vast majority of GERD

Research and development expenditures can be categorized into two core fields of science—natural sciences and engineering, and social sciences, humanities and the arts. GERD funding increased from 2017 levels to $33.5 billion in natural sciences and engineering and to $3.9 billion in social sciences, humanities and the arts.

R&D funding in the natural sciences and engineering field rose in all sectors, except the private non-profit sector, where funding levels were relatively unchanged from the previous year.

The higher education sector continued to be the main R&D funder of the social sciences field, representing 61.2% of the total. The federal government provided the second-largest share and accounted for 21.6% of the total.

On the performance side, natural sciences and engineering performance was up across all sectors, with the business enterprise and the higher education sectors performing 58.1% and 34.1% of the $33.5 billion in total funding, respectively. The higher education sector was also the only sector to report an annual increase in social sciences R&D performance, having performed 92.7% of all social sciences, humanities and the arts R&D in 2018.

Preliminary R&D expenditures expected to decline in 2019

Preliminary results show R&D expenditures falling by $688 million in 2019, primarily driven by a decrease in funding and performance by the business enterprise sector. Only the federal government and higher education sectors are expected to increase funding, by approximately $85 million each. The business enterprise sector is expected to decrease R&D funding by $671 million or by 4.2%.

With respect to performance, the higher education (+$172 million), federal government (+$83 million), and provincial research organizations (+$2 million) sectors are expected to increase the amount of R&D they performed in 2019. By contrast, R&D performance in the business enterprise sector is expected to decrease by $902 million.

Anticipated spending intentions for 2020

Data for R&D spending intentions for 2020 were collected before the onset of COVID-19. At that time, organizations across all sectors had indicated their intentions to increase R&D funding in 2020. Based on their responses, overall R&D spending is expected to rise by 1.8% (+$659 million) to $37.4 billion. The business enterprise (+$362 million) and federal government (+$101 million) sectors led the way in terms of higher spending intentions for 2020. The business enterprise, higher education, and federal government sectors expect to increase R&D performance by $462 million, $153 million, and $50 million, respectively.

Sustainable development goals

On January 1, 2016, the world officially began implementing the 2030 Agenda for Sustainable Development— the United Nations' transformative plan of action that addresses urgent global challenges over the next 15 years. The plan is based on 17 specific sustainable development goals.

Data on gross domestic expenditures on research and development are an example of how Statistics Canada supports the reporting on the global sustainable development goals. This release will be used to help measure the following goal:

Contact information

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