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The ongoing importance of gross domestic expenditures on research and development (GERD)

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Investment in research and development (R&D) is important to the economy of a country, and its measurement is an essential component of the Canadian statistical system. The publication, Gross Domestic Expenditures on Research and Development in Canada and the Provinces (GERD), 1997 to 2008 (Statistics Canada 2008a) provides a statistical picture of the Canadian system of research and development. These data inform public policy, help benchmark Canadian performance against other countries (OECD 2007, 2008) and provide essential input to the study of the impact of science and technology on the life of Canadians.

Canadian system of research and development
Trends in research and development performance
Benefits
References
About the author

Canadian system of research and development

Business, government, higher education sector and non-profit organizations all play a part in the system of research and development. Their research may be driven by different motivations, but they all contribute to the advancement of knowledge and well-being of Canadians. While their activities overlap, their roles are distinct. University research is inspired by the spirit of inquiry; business integrates research findings into applications to create new products and processes; and government and private non-profit organizations perform and support research for the public good.

The players are linked through various formal and informal arrangements to take advantage of each other’s core competencies. The relationship can take the form of a contract, a collaborative arrangement, a partnership or a donation. Table 1 provides a measure of this association. For example, the higher education sector spent $9.8 billion on R&D in 2008. Of this amount, 46% was contributed by universities and colleges themselves while government provided 36% and business and private non-profit organizations gave about 8% each.

Table 1 Gross domestic expenditures on research and development (R&D), Canada, 2008

Table 1
Gross domestic expenditures on research and development (R&D), Canada, 2008

International collaboration also plays an important role, as countries try to share the high costs, risks and expertise involved in the development of complex technologies. Common objectives and, in some cases, the global scope of the projects (for example, global warming) also drive co-operation. In 2008, foreign organizations supported R&D in Canada in the amount of $2.6 billion. All but a small amount went to businesses, including subsidiaries of foreign multinational corporations and to the headquarters of Canadian multinational corporations.

Trends in research and development performance

Business is the main R&D performing sector of the economy. Its research is usually targeted at proprietary product development. While most of business research is performed by the sector itself, it also enters into collaborative arrangements with other sectors. Partnership with universities and colleges is particularly beneficial because the latter specialize in knowledge creation, offer economies of scale and can quickly bring together multidisciplinary research teams. These arrangements enable industry to license technologies which incorporate not only the work sponsored by it but also the accumulated knowledge of researchers partly acquired from projects funded by government grants.      

While business is the leading R&D performer, institutions of higher education are becoming increasingly important. University research is the fastest growing component (Chart 1). Research activity is widely dispersed among many institutions but a small number account for much of the activity.

Chart 1 Trends in research and development performance, by sector, Canada, 1996 to 2008

Chart 1
Trends in research and development performance, by sector, Canada, 1996 to 2008

The educational function of universities and colleges gives them a particular advantage in research. While universities’ primary role in the system of research is to advance knowledge and generate highly qualified people, they do create intellectual property and commercialize it, by licensing it out to businesses or setting up spin-off companies, although their involvement in commercialization is small (Statistics Canada 2008b). The primary benefit of their research to society stems from the open nature of their work. Free dissemination of new findings increases the stock of knowledge and can guide applied research into more promising areas. The quantitative impact of scholarly publications can be studied by applying bibliometric analysis, which evaluates the number of times an article is cited in other publications and patent applications and their quality. For a bibliometric study of Canada, see Godin, Gingras and Davignon (1998); Narin, Hamilton and Olivastro (1997) offer an analysis of the new public knowledge (produced by academics and government researchers) embodied in commercial patent applications in the United States.

Government is one of the smaller performers in the system, in large part because of the nature of its role. While the government itself does perform research through its agencies and laboratories to meet its needs and those of its citizens, it mainly supports work in other sectors to correct what is known as market failure, or to fill the gap between private investment in basic research and the level that would maximize benefits to society. In 2008, government R&D performance amounted to $2.8 billion, compared with $4.0 billion spent in support of private sector research (Table 1).

R&D by the non-profit sector follows a pattern very similar to that observed for government. It performs a very small amount of R&D, but supports research at institutions of higher education through philanthropic activities. For more information on the R&D activities of Canadian private non-private organizaations, see ten Den (2008).

Benefits

R&D is a major factor in advancing knowledge, producing new technologies and improving the quality of life in the long run, although its benefits may not be immediately obvious. Outcomes of applied research become evident in the short term, but breakthrough contributions are usually the culmination of a series of studies and experiments done over time, in different countries and often in several fields of study.   

Quantitative indicators of the impact of R&D, such as private and social rates of return, have been developed but they are restrictive, generally confined to economic benefits. Beyond raising incomes, R&D contributes to improvements in the quality of life, through innovations in all fields, from space research to health to entertainment, and for all age groups. The Canadarm (Shuttle Remote Manipulation System or SRMS), which made its space debut in 1981, and BlackBerry are examples of Canadian research and technology.1 Substantial improvements in cancer survival rates owe much to advances in cancer prevention, detection and treatment achieved through research. In the area of communication and entertainment, new products based on information and communications technologies (ICTs) are facilitating and enhancing options, including such popular utilities as social networking sites and text messaging.

Selected data sources for international comparisons of science and technology activities

Organisation for Economic Co-operation and Development (OECD)

OECD, Main Science and Technology Indicators, Paris.

This publication contains various indicators of the level and trends in the gross domestic expenditures on research and development (GERD) for member states of the OECD and selected non-member states. The pattern of financing and of performance of GERD is also presented.

OECD Science, Technology and Industry Scoreboard, Paris.

The Scoreboard presents data to explore the interaction between knowledge and globalization.  It offers measures for international comparisons in key areas of policy interest. A wide range of indicators, including GERD, is presented to map the complexity of innovation activities instead of producing an overall ranking of countries derived from a unique, synthetic value.

United States

National Science Foundation, Science and Engineering Indicators, Volumes 1 and 2.

This publication is in two volumes. Volume 1 contains discussion and analysis. Volume 2 provides a broad base of quantitative information about United States science, engineering and technology, including science and engineering education, workforce, and R&D

Canada

Statistics Canada, Science Statistics, Catalogue no. 88-001-X.

This series, which consists of eight issues a year, presents a variety of science and technology statistics. Each issue concerns a different topic.

Statistics Canada, Gross Domestic Expenditures on Research and Development in Canada (GERD) and the Provinces, Catalogue no. 88-221-X.

This release presents levels and trends in GERD. Data are provided for total sciences, natural sciences and engineering and social sciences and humanities. It also offers matrices showing the flow of funds from the funding to performing sectors at the national and provincial levels as well as by science type.

Annual data on GERD by science type and by funding and performing sector are also available in CANSIM table 358-0001, available from the Statistics Canada Website.

References

Godin, Benoit, Yves Gingras and Louis Davignon. 1998. "Knowledge Flows in Canada as Measured by BibliometricsWorking Paper Series, Statistics Canada Catalogue no. 88F006X, no. 10.

Narin, Francis, Kimberly S. Hamilton and Dominic Olivastro. 1997. "The increasing linkage between U.S. technology and public science." Research Policy, Vol. 26, no. 3. p. 317-330.

Organisation for Economic Co-operation and Development (OECD). 2008. Main Science and Technology Indicators. Vol. 2008/1, Paris.

Organisation for Economic Co-operation and Development (OECD). 2007. OECD Science, Technology and Industry Scoreboard. Paris.

Statistics Canada. 2008a. Gross Domestic Expenditures on Research and Development in Canada (GERD) and the Provinces, 1997 to 2008. Statistics Canada Catalogue no. 88-221-XWE.

Statistics Canada. 2008b. Survey of Intellectual Property Commercialization in the Higher Education Sector, 2006 and 2005, 2008. Statistics Canada Catalogue no. 88-222-X.

ten Den, Catherine. 2008. “Research and development of Canadian Private Non-profit organizations, 2006.” Innovation Analysis Bulletin, Statistics Canada Catalogue no. 88-003-X, Vol. 10, no. 2.

About the author

Daood Hamdani is with the Science, Innovation and Electronic Information Division at Statistics Canada. For more information about this article, please contact sieidinfo@statcan.gc.ca.


Note

1. For a list of other Canadian inventions, see: www.cbc.ca/inventions/.