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Gross domestic expenditure on research and development, 2007 intentions

Gross domestic expenditure on research and development (GERD) represents total research and development (R&D) expenditures performed in a country’s national territory during a given year. GERD includes R&D performed within a country and funded from all sources, including governments, business enterprises, non-profit organizations, higher education institutions and foreign sources, but excludes payments sent abroad for R&D performed in other countries.

International comparisons

International comparisons of the levels of effort devoted to research and development (R&D) can be confounded by constantly fluctuating exchange rates among international currencies and changes in the relative costs of human resources and financial imports into the R&D programs of different nations. One of the methods the Organisation for Economic Co-operation and Development (OECD) employs to circumvent these difficulties is to express the gross domestic expenditure on research and development (GERD) as a ratio of gross domestic product (GDP). This ratio has become a standard OECD tool for international comparisons and also a convenient summary statistic. However, as a summary statistic, it is influenced by the economic structure and by the propensity to perform R&D in particular sectors. Both change from country to country.

The GERD/GDP ratio for 2006 is 1.94, down from the high of 2.05 hit in 2004. Total R&D spending registered a slight decline (-1.0%) between 2005 and 2006 in constant dollars indicating that investment in R&D in Canada is slowing while the overall economy is expanding (2.8%) (Table 1-1 ).

Internationally comparable data are available from the OECD for 2005. In that year Sweden with a GERD/GDP ratio of 3.89 led OECD countries with Finland following at 3.48. Canada ranks eleventh on the list of countries while the United States of America is in sixth place (Table 1-2 ).

Regional comparisons

Estimates of R&D activities by region may be easily misunderstood. For example, the financial data are identified with the region of the physical location of the R&D performer. It would be wrong to assume all of the expenditures of a performer are spent in the region of location. Supplies and equipment can be purchased from other regions 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, these expenditures, distributed geographically, are presented in Table 6 .

The private non-profit (PNP) sector appears in both the performing and funding sector for the gross domestic expenditures on research and development (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. The national totals of research and development by performing sector include the PNP sector. The data for the private non-profit sector funding research and development continue to be distributed by provinces, territories and the National Capital Region.

Figures on provincial distribution of R&D spending are available up to 2005. Quebec continued to lead the provinces in the provincial GERD to provincial GDP ratio at 2.6 in 2005; Ontario followed at 2.3. New Brunswick, Saskatchewan and Alberta at 1.0 reported the lowest provincial GERD to provincial GDP ratios slightly higher than the ratio reported by Hungary (0.94) and lower than Spain (1.12) (Table 3 ).

Ontario was the major performer of R&D in Canada with 45% of total R&D performance, Quebec followed at 26%. Taken together the Atlantic provinces represented 3.8% of total Canadian GERD whereas the three Prairies provinces combined for 12% (Table 3 ).