Analysis

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Gross domestic expenditure on research and development

This 2009 release of gross domestic expenditure on research and development (GERD) in Canada represents national expenditure intentions for 2008 and 2009 and historical data from 1998. Provincial research and development (R&D) expenditures measure preliminary 2007 data and historical data from 2003.

The GERD performing sectors include government (federal, provincial and provincial research organisations), business enterprise, private non-profit, and higher education. The sectors for sources of funding data are the same as performing with the addition of the foreign sector, since payments made to R&D performed abroad are not measured.

Canada’s GERD is separated into two fields of science: natural sciences and engineering, and social sciences and humanities. It should be noted that all R&D expenditures for the business enterprise sector, the largest performing R&D sector, are undertaken in the natural sciences and engineering field. As a result, natural sciences and engineering comprise over 90% of all R&D expenditures. In 2009, total R&D expenditures in natural sciences and engineering is anticipated to increase 1.2% to $27.5 billion while R&D expenditures in the social sciences and humanities is anticipated to increase 1.4% to $2.4 billion (current dollars).

International comparisons

The ratio of gross domestic expenditure on research and development (GERD) to gross domestic product (GDP) denotes the degree of R&D intensity or innovation of a country and is a commonly used summary statistic for international comparisons. However, this statistic should also be compared with GERD and GDP per capita values as it is influenced by a nation’s economic and demographc structure, as well as the propensity to perform R&D in particular sectors.

Canada’s GERD/GDP ratio for 2008 is 1.84, down from the ten year high of 2.09 attained in 2001. A lower GERD/GDP ratio indicates that R&D investments in Canada are diminishing as a percentage of total gross domestic product (Table 1-1).

The Organisation for Economic Co-operation and Development’s (OECD) publishes international statistics on R&D in its Main Science and Technology Indicators. The most recent edition (volume 2009/1, p. 25) displays comprehensive data for 2007. In that year Sweden held the highest GERD/GDP ratio among OECD member countries at 3.60, followed by Finland at 3.48. Canada’s investments in R&D as a percentage of GDP in 2007 at 1.88 ranked lower than the United States at 2.68 and the OECD average of 2.29, but was higher than the 1.77 ratio for the twenty-seven countries in the European Union (EU-27).

Regional data

Regional and national GERD definitions are similar. However, R&D expenditures by province can be easily misinterpreted. The expenditures data are associated with the region of location of the R&D activities, however, caution should be used in assuming that all R&D expenditures actually occur in this location. For example, supplies and equipment may be purchased from other locations, and cross-provincial border labour mobility can occur.

Regional performing sector expenditures are assigned to the province or territory in which the performing establishment is located. Similarly, regional funding sector expenditures represents R&D funding distributed in a province or territory; it does not require the funds to be raised within the province. For instance, when the federal government is shown as funding R&D in a province, the funds are recorded in one of the performing sectors. Intramural federal funding expenditures represent federal performance conducted in the province. For example, in 2007 the federal government funded $84 million of R&D in New Brunswick (Table 6-4). Of the total $84 million in R&D funding, over half ($45 million) was performed intramurally (by federal organization(s) located in New Brunswick), $35 million was performed in New Brunswick’s higher education sector and $4 million in New Brunswick’s business enterprise sector.

The private non-profit (PNP) sector funding and performing data for R&D appear only in the GERD national data. As of reference year 2000, R&D performance data for the private non-profit sector are not distributed by province or territory. However, R&D funding data for the private non-profit sector are distributed by province and territory. In 2007 the highest value of PNP funding, near $400 million, occurred in Ontario. However, when compared to all other funding sources available for each province, PNP’s share was highest in Manitoba at 6.3% (Table 4-2).

Data on the provincial distribution of R&D spending are available up to 2007. Expenditures for R&D performed by the federal government in the national capital region (NCR) are now included with the provincial totals. However NCR data for Ontario and Quebec are reported separately by field of science in Appendix I. In 2007, NCR R&D expenditures in Ontario were $1.0 billion and NCR R&D expenditures in Quebec were $100 million, for a NCR R&D total of $1.1 billion (current dollars) (Appendix I).

The ratio of provincial GERD to provincial GDP in 2007 remained the highest in Quebec at 2.63 followed by a ratio of 2.32 in Ontario. However, the GERD per capita for 2007 is slightly higher in Ontario at $1,069 versus Quebec at $1,022. This reinforces the need to review more than one statistic when evaluating innovation. The lowest provincial GERD to provincial GDP ratio was reported in Saskatchewan (0.87) with a GERD per capita value of $444. Comparatively, Prince Edward Island reported a higher GERD to GDP ratio at 1.29, but a lower GERD per capital value of $420. Many varying factors such as economic structure and population impact these GERD ratios differently. Correspondingly, while Alberta’s GERD to GDP ratio ranks 8^th among the 10 provinces at 0.94, its GERD per capita value ranks third highest at $692 (Table 2).

R&D expenditures in the social sciences and humanities rose 8% at the national level from 2006 to 2007. Ontario accounted for one-third of the total increase in the social sciences and humanities field, followed by Quebec and Alberta with each contributing one-fifth. British Columbia furnished 14% of the rise in this field, with the provinces of Newfoundland and Labrador, Nova Scotia, New Brunswick and Manitoba making up the remainder (Tables 10-1 to 10-11).