Analysis

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Gross domestic expenditures on research and development

Gross domestic expenditure on research and development (GERD) in Canada represents national and provincial research and development (R&D) expenditures performed by all sectors including governments, business enterprises, non-profit organizations, and higher education institutions. Source of funding data are also available for each of the aforementioned areas in addition to the foreign sector, as payments sent abroad for R&D performed in other countries are not measured. Canadian data are also separated into two fields of science: natural sciences and engineering, and social sciences and humanities.

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 within a country and is a commonly used summary statistic for international comparisons. However, this statistic is influenced by a nation’s economic structure and propensity to perform R&D in particular sectors which varies from country to country.

Canada’s GERD/GDP ratio for 2007 is 1.88, down from 2.08 attained in 2004, indicating that R&D investments in Canada are declining as a percentage of total gross domestic product (Table 1-1).

The Organisation for Economic Co-operation and Development’s (OECD) Main Science and Technology Indicators (Vol 2008/1, p. 18) has published data for year 2006 which show a GERD/GDP ratio of 1.94 for Canada, 2.62 for the United States, and 1.76 for twenty-seven countries in the European Union (EU-27). Canada’s 2006 investments in R&D as a percentage of GDP were below that of the neighbouring United States, but greater than the EU-27.

All R&D expenditures for the business enterprise sector, the largest performing R&D sector are undertaken in the natural sciences and engineering. Therefore, R&D expenditures are mainly concentrated in natural sciences and engineering; in 2008 $26.9 billion (current dollars) were allocated to this field of science (Table 7). However, since 2001 the share of R&D allocated to social sciences and humanities has been increasing, albeit slightly, from 6.0% to 7.5% in 2008 with a value of $2.2 billion (current dollars) (Table 9).

Regional data

The definition of GERD in a provincial context is similar to that provided above. The expenditures are assigned to the province in which the performing establishment is located. The funding shown is of R&D carried out in a province; it is not R&D funding from a province. For example, when the federal government is shown as the funder for R&D in a province, the funds are received from the central government and are to be spent on R&D in an establishment in that province. The federal government, of course, raises funds from many sources outside of that province. Similarly, when R&D is shown as being funded by the business enterprise sector, the funds are not necessarily raised from activities within the province.

It would be misleading to assume all of the expenditures of a performer are spent in the region of location. Supplies and equipment can be purchased from other provinces or countries. Furthermore, in cases such as the National Capital Region (NCR), labour moves freely between Quebec and Ontario so that even wages and salaries paid by an R&D performer are partly spent outside the reference province. Expenditures for R&D performed by the federal government in the NCR are excluded from the provincial totals and are reported separately. However, for the first time in this publication, NCR expenditures are allocated between the provinces of Ontario and Quebec. In 2006 total NCR expenditures on R&D were $1.1 billion (current dollars), of which Ontario held 92% and Quebec 8% (Table 4-1 and 4-2).

The private non-profit (PNP) sector appears in both the performing and funding sector of GERD for Canada. Commencing with reference year 2000, the data for the private non-profit sector performing research and development are not distributed by provinces, territories or the National Capital Region. However, data for the private non-profit sector funding research and development continue to be distributed by provinces and territories. For example, in 2006 the province with the highest percentage of funding attributed to PNP was Manitoba at 6.8% (Table 4-2).

Data on provincial distribution of R&D spending are available up to 2006. The ratio of provincial GERD to provincial GDP in 2006 remained the highest in Quebec at 2.70 followed by a ratio of 2.27 in Ontario (excludes NCR). The lowest provincial GERD to provincial GDP ratios were reported in Saskatchewan (1.00), Newfoundland and Labrador (1.01), and Alberta (1.01) (Table 2). Although Alberta’s spending on R&D ranks 4^th in terms of expenditures among all provinces and territories, in comparison to its large provincial GDP, R&D outlays in Alberta are minimal.

In 2006, Ontario expenditures on R&D reached $12.7 billion in current dollars or 44% of national R&D performance followed by Quebec at $7.6 billion or 26% of national R&D performance (excludes NCR). British Columbia represented 9% of gross domestic expenditures on R&D at $2.6 billion while the neighbouring Prairie provinces made up 12% or $3.4 billion. The Atlantic provinces represented 4% or $1.1 billion of total national GERD. (Table 2).