STIC assessment of Canadian STI performance called "disturbing"

Business R&D ranking falls to 26th

The Science, Technology and Innovation Council (STIC) pulled no punches in its grim assessment of Canada's performance on a wide range of science, technology and innovation (STI) indicators. Its fourth biannual public report, State of the Nation Report 2014 describes Canadian STI performance as "disturbing", particularly in the area of business performance.

The STIC report is just the latest in a series of equally pessimistic assessments from the World Economic Forum, Conference Board of Canada and UNESCO.

STIC assesses Canada's STI performance with three broad criteria: an innovative private sector, skilled and creative talent and high-quality knowledge.

It reports that business expenditures on R&D (BERD) as a share of gross domestic product fell once again, placing Canada 26th among international competitors and "only 36 percent of the threshold of the top five performers" — Israel, Korea, Japan, Chinese Taipei and Finland. It also found that investment intensity in information and communications technologies (ICT) is "middle of the pack" and the uptake of talent by business is weak, dropping from 7th to 15th between 2006 and 2012.

"Canada's most profound and urgent ST&I challenge lies in increasing the number of firms that embrace and effectively manage innovation as a competitiveness and growth strategy ... We cannot be complacent. Maintaining and enhancing excellence requires that our investments keep pace with those of competitor countries ... Responsibility ... rests with all players in the ST&I ecosystem." — State of the Nation 2014

The list of business R&D deficiencies is long, ranging from the anemic global competitiveness of large Canadian corporations to the balance between direct and indirect government support for business R&D. The latter metric shows that "Canada continued to be out of step with international competitors" due to its high reliance on indirect measures.

The report was released in Ottawa November 27 at the Canadian Science Policy Conference, followed by a question and answer session involving several members of the STIC panel.

"Our report suggests we will not continue to be a viable entity … if we continue to be hewers wood and drawers of water," said STIC chair Ken Knox. "Between 2007 and 2015 we have lost $1 billion of expenditures in R&D by companies in Canada. That is the most significant drop of any country in the world ... It has allowed us to fall from 18th to 26th in a six-year period."

The STIC report was scheduled for release last May but was delayed to allow Knox to get up to speed following his arrival as STIC chair April 30th

For gross expenditures on R&D (GERD), the situation is only marginally less bleak with Canada's ranking falling from 16th in 2006 to 24th in 2013 — a far cry from the aspirational 15th to 5th target set by the Jean Chrétien government at the beginning of the millenium (R$, November 28/01).

Zeroing in on Canada's support for business R&D, Knox said the imbalance between direct and indirect support has to be resolved. Currently, Canada has the highest level of indirect (tax-based) based support in the industrialized world, primarily through the Scientific Research and Experimental Development (SR&ED) tax credit program.

"Clearly the course we've headed for the last decade with SR&ED hasn't worked to get our businesses where we need to be. We need to continue to invest in research, provincially and nationally to compete with other jurisdictions that are investing more than we are," said Knox.

While the STIC report lends an urgency to the state of Canadian STI performance, the story has been similar for the past few decades as politicians and policy makers struggle to assemble an effective ecosystem for the knowledge-based economy. John Knubley, DM of Innovation, Science and Economic Development (formely Industry Canada) also addressed the STIC report's findings and called for a significant change in approach.

"We have to do something different. There's a huge opportunity to align programs and leverage them better and change the metrics," said Knubley. "We need to open up dialogue to shape investment to pursue global excellence."

High-Quality Knowledge

Knowledge generation by higher education R&D (HERD) at post-secondary institutions has remained relatively unchanged since 2006. But Canada's ranking in HERD intensity has since dropped from third to eighth as other countries ramp up investments.

STIC found that granting council funding has experienced a "marginal decline". Three recent international university ranking show Canada "competitive in a second tier of countries" behind leaders such as the US, UK yet "made no progress in moving its ranking universities closer to the top 10".

In terms of impact, Canada ranks above average and sits eighth globally as of 2012. Canada ranked highest in the areas of chemistry, physics, applied biology and ecology and medical research. Canada also shows strength in its "star power" researchers, ranking sixth and reflecting superior ability to attract top talent from abroad.

Knowledge transfer performance "continued to be lackluster" with technology licensing declining 5.9% between 2007 and 2012 compared to a 25% increase in the US over the same period. The findings led STIC to conclude that Canada's universities and researchers must be given the support they need to "excel on the global stage".

"Perhaps universities should stop thinking about IP (intellectual property). Nobody's winning at this and we're creating barriers," said Dr Marc Fortin, CEO of Defence R&D Canada. "We need better ways to move intellectual capital in a more systems way."

Skilled and creative talent

Canadian talent and talent generation remain relatively high, although STIC questions whether the balance of skills and opportunities is sufficient. It notes that the number of PhDs doubled between 2006 and 2012, improving the nation's ranking from 19th to 17th.

For the number of (non PhD) graduates in science, engineering, business and health, however, Canada's ranking declined from 14th to 16th.

Recent strategic investments in enhancing research capacity in strategic areas, while welcome, "are not sufficient to achieve the scale that Canada needs to be truly competitive internationally".

The report is available at www.stic-csti.ca.

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