Editorial - 15-1

The latest numbers on total R&D spending from Statistics Canada forcefully demonstrate the difficulties facing the federal government in meeting its ambitious targets on raising the R&D intensity of the nation. Even though R&D expenditures are up significantly, the booming economy of the late 1990s has meant that the key R&D-to-GDP ratio upon which Canada is ranked against other industrialized nations is dropping (see here).

This poses a formidable challenge to Finance minister Paul Martin, who has pledged to place Canada within the top five of R&D spending nations, requiring a much higher GERD-to-GDP ratio of at least 2.7 (R$, October 2/00).

The StatsCan data show that the increase in Canada's R&D performance comes largely within the higher education sector, as a result of new federal programs and changes to the methodology for gauging higher education R&D. For Martin's goal to be realized, however, the business sector must increase its R&D activities much more aggressively than in the past.

That poses a major policy dilemma for the government, since its tax incentive and assistance programs are already among the most generous in the world.

It's no wonder then, that Finance Canada is showing great interest in the model being promoted by Inno-Centre Canada (see lead story). Inno-Centre is aiming to prove that Canadian-developed technology can be financed and commercialized by Canadians with the resulting benefits remaining in Canada. It's worth a try and Inno-Centre is to be commended for its ambitious national roll-out strategy.

Mark Henderson, Managing Editor