STIC report details key shortcomings in federal measures to stimulate innovation

State of the Nation 2012

Canada's showpiece indicator for international science, technology and innovation (STI) — Higher Education R&D (HERD) —has eroded significantly, according to new data released May 21st in Ottawa by the Science,Technology and Innovation Council (STIC). While Canada's spending on HERD still ranks number one among G7 nations, it is slipping rapidly among the 41 comparator countries used by STIC in its State of the Nation (SON) 2012 report.

Data show that Canada ranked ninth in the larger group in 2011, down from fourth in 2008 and third in 2006. The alarming finding prompted STIC chair Dr Howard Alper to "strongly encourage the government to substantially increase their investments in ground-breaking research to help shape Canada's future and seize new opportunities to give us competitive advantage".

"With their significant investments in research and higher education, other countries are catching up and overtaking Canada," states the report.

The sentiment was echoed by Dr Heather Munroe-Blum, a STIC member and outgoing principal and vice-chancellor of McGill Univ: "We're losing our place over time … There's a problem there that has to be addressed."

Perhaps not coincidentally, at simultaneous event across town, senior officials from the three granting councils, the Canada Foundation for Innovation and Genome Canada delivered presentations regarding federal government support for discovery research, followed by a Q&A session with Dr Gary Goodyear, minister of state for science and technology.

Viewed as an aggregation of the nation's STI capacity and performance, the SON report raises many causes for concern. It offers a sobering view of Canada's decline in a host of STI indicators, not the least of which is the persistently low level of Business Expenditures on R&D (BERD).

Long cited as the weak link in Canada's innovation system, BERD has continued to slip since 2006, declining as a percentage of GDP from 1.14% in that year to 0.89% in 2011.

"The BERD-to-GDP ratio has continuously declined over the past decade," said Simon Primstone, STIC member and president and CEO of Xenon Pharmaceuticals Inc, adding several of Canada's major industrial performers have decreased R&D spending: pharmaceutical and medicine manufacturing; ICT manufacturing; motor vehicle and parts manufacturing; and finance, insurance and real estate.

"Despite Canada's relatively strong macroeconomic fundamentals, Canadian firms are not harnessing innovation to make competitive gains. In international rankings related to business innovation, Canada continues to place in the middle of the pack on most measures and, in some cases, Canada's rank has declined," states the report.

The picture is not much better when it comes to business investment in information and communications technology (ICT) — often cited as a key contributor to innovation and productivity growth. While Canadian ICT investment is growing, it's still far from where it should be and trails the top five global performers (US, Sweden, Denmark, UK and New Zealand).

As a call to arms, the SON report identifies five so-called "aspirational" indicators (see chart) where all sectors must substantially improve their performance to propel Canada into the global top five in each category to "help secure Canada's future as a global STI leader"

"To realize this goal, all participants in our STI ecosystem must assume responsibility. We must work together not only to invest more in STI, but to invest more strategically and coherently, learn from the experience of global STI leaders, and be more agile seizing opportunities. That is how Canada will truly be able to "run with the best,"" states the report.

The report commends the government on its use of procurement to stimulate innovation and attempts to redress the imbalance in direct and indirect support for business R&D. But in both cases, it says there is much more to be done.

"In STIC's view, the low level of direct support in Canada handicaps the competitiveness of Canadian business R&D on a global basis," states the report.

To read the report, go to www.stic-csti.ca.

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