State of the Nation 2010


3. Going Forward — A Core Set of Indicators to Measure Innovation

Measuring innovation is a worldwide work in progress. It has evolved from measures of research and development and talent to encompass measures of machinery and equipment, intangibles such as software and databases, and in-firm specific human and organizational capital. Section 4 describes recent developments in measuring innovation. In this section, we propose a set of indicators that place a premium on allowing for international comparison on a standardized basis. Some of the indicators are available for Canada only. The indicators are useful because they are more recent, and often provide significant industry-level detail and allow for analysis across time. Other innovation measures are compiled by international organizations such as the OECD, the World Economic Forum, INSEAD and others. International sources, while allowing for comparisons between countries, often do not provide the level of detail that helps countries compare or benchmark the innovative performance by industry or industry sector.

Research for the State of the Nation 2010 report, progress in developing metrics for innovation and consultations with participants in the innovation system over the last three years, have led STIC to recommend a short list of indicators going forward. To better account for innovation that is more than R&D and to enable better benchmarking by participants in the innovation system, the following set of indicators is identified for ongoing monitoring.

Performance Indicators for Canada's Innovation System

Indicator

Year of Data

Rationale

Talent

1. Organisation for Economic Co-operation and Development's (OECD) Programme for International Student Assessment (PISA): 15 year-olds

2009

Measures Canada against international sample, benchmarking talent at the secondary school level. Assesses reading, mathematics and science.

2. Percentage of population with tertiary education

2008

Measures supply of advanced skills, which can contribute to productivity gains.

3. Numbers of bachelor-degree graduates in science and engineering-related disciplines from university

2008

Measures graduates with a package of skills and knowledge that is valued in the labour market and can contribute to economic growth.

4. Number of PhDs in science, math and engineering (graduates)

2008

Measures talent pool at technology frontier.

5. Research and development (R&D) personnel in business

2007

Measures industry use of highly qualified researchers.

Research and Development

6. Gross domestic expenditure on R&D
(GERD) as a share of Gross Domestic Product (GDP)

2008

Benchmarks Canadian resources allocated to R&D against other countries.

7. GERD by performing sector in constant dollars

2008

Illustrates the state of R&D spending by business, government and higher education and highlights the trends in each.

8. Major flows of R&D funding in Canada

2009

Illustrates the links between sources of funding and R&D performers.

9. Business expenditure on R&D (BERD) intensity by country

2008

Benchmarks R&D performed in business in Canada vs. R&D performed in business in other countries. Data can be presented on an industry sector basis.

10. Direct and indirect government support to business for R&D

2008

Tracks the type of mechanisms used by government to encourage private sector investment in R&D. Benchmarking with other countries aids analysis on the efficacy of policy instruments.

11. Higher education performance of R&D, as a share of GDP

2008

Benchmarks R&D performed in universities in Canada vs. R&D performed in universities in other countries.

12. Share of all business-financed R&D performed by higher education sector and others

2009

Illustrates trends in business strategies and propensity to perform R&D in-house or through outsourcing.

13. Intramural government R&D: share of GDP in Canada and the G7

2008

Benchmarks R&D in government labs and institutes vs. R&D performed in government in other countries. Measures R&D important to achieving societal goals that would not be conducted by other parts of the innovation system.

Innovation (other than R&D)

14. Investment in machinery and equipment, including information and communications technologies (ICT), as a share of GDP

2007

Measures inputs to innovation other than R&D. New ideas are embedded in leading-edge technologies and enable workers to produce more and higher-quality goods and services through more efficient business processes.

15. Utilization of information technology (IT) services

2005

Measures input to innovation other than R&D. Technological change is prompting changes in business processes, which result in infrastructure, intangibles such as software, and customer service being bundled as a service.

16. Venture capital relative to GDP

2008

Measures the pool of capital important for start-ups in the knowledge intensive ICT and life sciences industries. Tracks the capacity for undertaking high-risk investments.

17. Firms collaborating in innovative activities with public or private partners, government, and higher education institutions by size

2002–2004, no updates for Canada

Collaboration has become an important source of competitive advantage. Innovations are increasingly brought to the market by networks of business, academic and government partners. Regional associations can be partners in tracking collaboration within geographic clusters.

18. Number of licences from universities to businesses

2008

Measures technology transfer and potentially commercially-valuable knowledge transfer to the private sector. Indicates leveraging of public investments in higher education.

19. Trademarks

2008

Trademarks can be applied to innovation in goods and services and encompass marketing innovation. The OECD has found that trademark applications are highly correlated with other innovation indicators.

20. Technology intensive trade flows (services and goods)

2010

Measures the ability of Canadian enterprises to export goods and services and trends in the use of goods and services by Canadian companies. Measures Canadian success on a global scale (i.e., global demand for Canadian ideas and expertise). Payments reflect Canadian demand and awareness of global opportunities.