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Canada’s Low Business R&D Intensity: the Role of Industry Composition

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Aled ab Iorwerth

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Abstract

This paper looks at the reasons for Canada’s low business research and development (R&D) intensity. R&D performance across OECD countries is examined, and a detailed decomposition is undertaken of differences between Canadian and U.S. R&D levels across industries. Canada’s low aggregate R&D performance hides high research intensities in some research-intensive industries. The smaller relative size of these industries, however, combined with low R&D intensity in the motor vehicle and service industries, account for the weak aggregate R&D performance in Canada.

L’auteur examine les raisons pour le faible niveau de l’intensité en recherche et développement (R&D) dans le secteur privé au Canada. La performance en R&D dans les pays de l’OCDE est examinée et une décomposition détaillée est faite pour les différences entre les niveaux de R&D des industries aux États-Unis et au Canada. La faible performance agrégée du Canada en R&D cache des intensités en recherche élevées aux seins de plusieurs industries qui utilisent la R&D de façon intensive. Cependant la plus petite taille relative de ces industries en plus d’intensité très faible dans les industries des véhicules automobiles et des services enfreignent la performance globale en R&D au Canada.

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Paper provided by Department of Finance Canada in its series Working Papers-Department of Finance Canada with number 2005-03.

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