Canada's R&D Deficit Report

This report analyzes Canada's underperformance in research and development (R&D) spending compared to other industrialized nations. The author examines the relationship between productivity growth, innovation, and government policy, focusing on Canada's challenges in increasing R&D investment in both the public and private sectors. The report identifies roadblocks hindering Canada's R&D progress, including its resource-rich economy and manufacturing-centric structure. Using secondary data from 1990-2001, the author compares Canada's R&D expenditure to OECD averages, highlighting lower spending levels and lower employment rates in R&D compared to other developed countries. The report concludes that Canada lags in R&D performance due to structural factors. Policy recommendations include redirecting federal and provincial resources towards the business sector, increasing GDP spending on R&D to 3%, and improving overall innovation performance.

Summary of the article
The article talks about the interaction between growth in the productivity levels and innovation
of a country and this interaction is related to the policy that the government of Canada adopted in
this field. So, basically the article tries to re-examine that. The author of this article believes; that
for raising the standards of living of the people of a country, the growth in the productivity level
is required and the improvements in the level of productivity can be improved only if the country
focuses on the innovation. Many countries have a trust in this theory and thus they have
developed the relevant policy frameworks for encouraging the innovation. Many people carry an
opinion that R&D is important to achieve if the nation wants to grow and for that, the
governments of the various nations need to adopt the ‘best’ policies or measures. Here in this
article, the author has particularly picked the Canadian issue at hand because there are some
roadblocks that are not enabling Canadian government to raise their R&D spending. But, the
article also talks about the possible solutions and the fiscal reforms that can help the nation
(Ottawa) in achieving its goal.

The issue at hand
Currently, the issue is related to strucking of the research and development spending of Canada
in the middle range of the world’s industrialized nations. The country needs to put a concentrated
effort for increasing its spending in R&D in both private and public sectors and that is the target
of the country which it wants to achieve. But there are some roadblocks that are not letting
Canada achieve this target and it is making efforts to remove them. Some of the roadblocks
include: the resource base of Canada is huge and the manufacturing activities is at the centre of
the country.
The approach/way followed by the author
The author has collected the secondary data from various sources and hence he has used that data
for approaching this issue. In the secondary sources, the author has collected the statements that
the governments of many countries have put in this regard. He has collected all those statements
and the policy commitments that they have made. Also, the author has tried to collect data from
various sources regarding the spending on R&D, etc. for analyzing that.
All the data is related to Canada and it has been compared to other countries. In his approach, he
has firstly reviewed the debate on the innovation performance of Canada with respect to private
sector’s R&D and then the author has talked about the barriers that the country is facing and
what needs to be overcome so that the innovation can be achieved.

The type of data used and the reference period of the research
The author has particularly used the secondary sources because he had to review the data of past
years for coming to conclusions. The statements have been collected that the governments of
many countries have put in this regard. All those statements and the policy commitments that
they have made are gathered by the author. Also, the author has tried to collect data from various
sources regarding the spending on R&D, etc. for analyzing that.
The data is taken for the period of 1990-2001. This is because this was period during which the
country faced most of the problems and hence this was required to be reviewed.
The main conclusions derived by the author and the policy recommendations made on that
basis
The main conclusion that was derived from this research was that Canada was lagging R&D
performance. The country was found to be lower in the levels of spending when compared to
OECD averages. When compared to the other develop countries, the gross domestic expenditure
of Canada on R&D was much lower. The businesses in Canada are also not found to spend much
in the R&D sector. Also, it has been found that in this country, the spending on personnel or the
rate of employment was lower than other country which means that when new people are not
employed, the scope of innovation reduces automatically. But, the main reasons for less spending
that have been found by the author are: the structural factors that are related to the huge base of
resources in Canada and the agglomeration of the manufacturing activities at the centre of the
country. These things are not letting the country spend in R&D.

The policy recommendations that the author has made on this basis involve focusing the federal
and provincial resources to the business sector rather than relying on the R&D tax credit system.
The GDP spending should be increased up to 3% in the R&D spending. Innovation performance
must also be improved.