State of the Nation 2014

Canada's Science, Technology and Innovation System: Canada's Innovation Challenges and Opportunities

Annex 2: An innovative private sector

Business Enterprise Expenditures on Research and Development (berd) and berd Intensity in Canada

Figure 2A: berd and berd Intensity in Canada, 2000–2015

Bar chart of business enterprise expenditures on research and development (BERD) and BERD intensity in Canada, 2000–2015 (the long description is located below the image)

Sources: Statistics Canada, Table 358-0024 (accessed July 16, 2015); oecd, Main Science and Technology Indicators, January 2015.

Description of figure 2A

For almost a decade, business enterprise expenditures on research and development (berd) in Canada have generally been in decline. As noted in Chapter 2, from 2006 to 2015, berd declined by more than $1 billion, reflecting a decrease of about 6 percent over the period. Although berd reached $16.894 billion in 2011, a gradual decrease began in 2012, with berd falling to $15.462 billion in 2015.

The percentage of firms in Canada that perform research and development (R&D) (i.e., the R&D participation rate) remained steady since the 2006 baseline at 2.2 percent in both 2006 and 2012 (the most recent year for which data are available). The R&D participation rate was much higher among manufacturing firms than service firms (17.3 percent compared with 1.6 percent). However, many manufacturing industries saw decreases in the R&D participation rate from 2006 to 2012, including the pharmaceutical industry (from 50.6 percent in 2006 to 47.5 percent in 2012) and the communications equipment industry (from 55.7 percent in 2006 to 52.3 percent in 2012).42 Overall, the R&D participation rate of manufacturing firms decreased by about 1 percent from 2006 to 2012; conversely, the R&D participation rate of service firms increased by about 2 percent.

Among service industries, scientific research and development services had the greatest R&D participation rate (41 percent in 2011), followed by computer system design and related services (12.5 percent) and information and cultural industries (10.3 percent). Firms in other service industries had far lower R&D participation rates, including those important to the Canadian economy (e.g., the finance, insurance and real estate industry, at 0.6 percent).

Product and Process Innovation in Canada, by Industry

Figure 2B-1: Product Innovation by Industry

Bar chart of product innovation by industry, in percentage of surveyed firms (the long description is located below the image)

Source: Statistics Canada, Table 358-0221 (accessed October 20, 2014).

* 2007–2009 data unreliable.
** 2010–2012 data unreliable.

Description of figure 2B-1

While Chapter 2 provided an international comparison of the introduction of product and process innovation, the data provided here dig deeper into the performance of different industries within Canada, using Statistics Canada's Survey of Innovation and Business Strategy (sibs). The survey has been conducted twice, first looking at innovations introduced during the 2007–2009 period and, most recently, at those innovations introduced between 2010 and 2012.

While firm investment in R&D is critical, data on berd do not necessarily capture all innovating firms in Canada as R&D is not always a necessary input to innovation. Some of the most innovative firms in the world are not among the top R&D spenders globally.43 While only 2.2 percent of all firms in Canada performed R&D in 2012,44 35.1 percent of firms participating in the sibs reported introducing a product innovation between 2010 and 2012 (up slightly from 34.8 percent between 2007 and 2009) and 29 percent reported introducing a process innovation (down from 33.5 percent).45

Figure 2B-2: Process Innovation by Industry

Process innovation by industry (the long description is located below the image)

Source: Statistics Canada, Table 358-0221 (accessed October 20, 2014).

* 2007–2009 data unreliable.
** 2010–2012 data unreliable.

Description of figure 2B-2

In Canada, the share of firms introducing innovations differs considerably by industry. Some industries are more oriented towards product innovation and others towards process innovation. The performance of a number of industries in introducing product and process innovations declined between 2007 and 2009 and between 2010 and 2012, including manufacturing, information and cultural industries, wholesale trade, and transportation and warehousing. The share of firms introducing process innovations declined in almost all industries between the two periods.

Natural resources industries are often cited as an area in which a lot of innovation may be occurring that is not captured in R&D-based indicators. Yet within mining, quarrying and oil and gas extraction, about one quarter of firms reported introducing either a product or process innovation between 2010 and 2012. This is below the percentage reported for all surveyed firms in Canada. Those industries that reported introducing product and process innovations above the percentage reported for all surveyed firms in Canada tend to be related to professional, scientific and technical services; manufacturing; and information and cultural industries.

International Comparison of the Change in Multifactor Productivity

Figure 2C: International Comparison of the Change in Multifactor Productivity, 1995–2013

Bar chart of international comparison of the change in multifactor productivity, 1995–2013 (annual percentage) (the long description is located below the image)

Source: oecd, Growth in GDP per Capita, Productivity and Unit Labour Cost (ULC) (accessed October 22, 2015).

Description of figure 2C

International Comparison of Export Market Share in R&D-Intensive Industries

Figure 2D: International Comparison of Export Market Share in R&D-Intensive Industries, 2013

Bar chart of international comparison of export market share in R&D-intensive industries, 2013 (percentage)  (the long description is located below the image)

Source: oecd, Main Science and Technology Indicators, January 2015.

Description of figure 2D


42 Statistics Canada, Industrial Research and Development: Intentions 2013, Catalogue no. 88-202-X; and Statistics Canada, Industrial Research and Development: Intentions 2015, Catalogue no. 88-202-X. Return to text

43 Strategy&, The Top Innovators and Spenders, 2015. Return to text

44 Statistics Canada, Industrial Research and Development: Intentions 2015, Catalogue no. 88-202-X. Return to text

45 Because the sibs excludes firms with fewer than 20 employees, a large number of non-innovating firms may not be captured in the sibs data. As a result, the total share of firms innovating in Canada is likely to be lower than the share reported by the sibs. Return to text