Eight months after being withdrawn for further study, Statistics Canada has released its annual industrial R&D survey as part of a much larger package of data detailing private sector R&D activity and its ranking internationally (Catalogue number 88-202-XIB). As expected, the economic boom continues to fuel healthy increases in R&D expenditures, with preliminary figures for 1998 showing total intramural expenditures of $9.123 billion, an increase of 7.1% over 1997's total of $8.519 billion. The rate of increase was expected to slow, with a somewhat more leisurely gain of 4.7% projected in 1999.

Due to the lateness of the data's release, the next annual installment is expected to follow quickly (mid-September) which will include data for 1999 with intentions for 2000. StatsCan has had nothing but trouble with its industrial R&D survey since it opted to use Revenue Canada (now the Canadian Customs and Revenue Agency - CCRA ) data for firms spending less than $1 million on R&D.

After a long, laborious process of combining CCRA data with its own survey (for firms spending more than $1 million annually), the current survey was withdrawn after concerns of missing data were raised by the Quebec government (R$, February 25/00). Further analysis yielded a further 14% or $145 million in CCRA administrative data were missing from the original survey, which amounts to 1.7% of the annual total. That's slightly higher than StatsCan's acceptable limit of 1%.

It should be noted that the R&D outlays captured in StatsCan's own survey of larger firms accounts for the vast majority of total industrial R&D spending. In fact, the top 50 R&D spenders (0.6% of the total performing firms) account for more than half of the total.

Canada's strength in telecommunications equipment dominates the survey results, with those R&D intensive firms accounting for a projected $2.165 billion in 1999 or 22.6% of the annual total. That compares to the 17.1% share telecommunications commanded in 1995 when the sector spent $1.381 billion.

The telecommunication equipment sector's strength in Ontario helped boost that province's share to $4.715 billion or 55.3% of the 1997 total. Quebec ranks a distant second with $2.422 billion or 28.4%, while R&D expenditures performed in British Columbia and Alberta were $593 million and $522 million respectively. All other provinces totalled just $267 million.

Internationally, Canada's industrial performers are considered to be "middle ranking" R&D spenders, accounting for 1% of GDP in 1997 and up from 0.8% 10 years earlier. Sweden tops the list at nearly 3% GDP, which gained nearly a full percentage point in the same 10-year period. Industrial R&D spending in the United States slipped over the same decade and stood at 2% in 1997, ranking third behind second place Japan.

The importance of industrial R&D is highlighted in StatsCan's 1963-1999 overview of gross domestic expenditures on R&D (GERD). In 1963, business enterprises accounted for just 42% of GERD , compared to a projected 63% in 1999. In contrast, the federal government's share dropped from 24% to 11% in the same period. R&D spending by the higher education sector also dropped from 30% to 27% over the 27-year period, as did provincial government's whose 4% share in 1963 was reduced to a projected 1% in 1999. Spending by private, non-profit organizations held steady at 1%. The above data is for natural sciences and engineering R&D only.

Telecommunications equipment and five other industries have long dominated intramural R&D spending. They account for more than 60% of all R&D outlays and have maintained this position for the past five years. The other industries are: aircraft and parts, engineering and scientific services, computer and related services, wholesale trade, and pharmaceutical and medicine.

Of the 8,260 firms included in the survey, 464 or 5.6% were foreign-controlled, but they accounted for $2.925 billion or 34.3% of total R&D expenditures in 1997. Canadian-controlled firms accounted for $5.594 billion or 65.7%. The mining and oil wells industries had the highest level of spending by foreign-controlled firms (67%), while utilities had the lowest (0%).

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