Buy-buy Nortel, Bye-bye Canadian R&D spending

The international competition for R&D is extreme (source).

• China’s R&D spending has grown by 22 per cent a year since 1996.
• Australia spends 2 per cent of GDP on research and development, having grown 8 per cent a year since 1996. Not satisfied with this, government recently released its innovation policy agenda to 2020.
• Austria, Denmark, Germany, Iceland, Switzerland, Taiwan, and the United States spend more than 2.5 per cent.
• Finland, Japan, South Korea, and Sweden spend more than 3 per cent.
• Israel spends more than 4 per cent.

Canadian industry research spending in 2007 was only 1.03 per cent of the country’s GDP, putting Canada in 12th place among the industrialized nations. According to Statistics Canada, the private sector spent $16.3 billion on R&D in 2008, up slightly from $16.1 billion in 2007 (source). The majority of the private sector investment in R&D is actually done by a small handful of companies: in 2007 the top two private R&D investors spent more on R&D than the next eight investors combined (source). Those top two were Nortel and BCE.

More troubling, R&D spending by Canadian businesses has been decreasing since 2002 (source).

University of Toronto President David Naylor recently addressed the Economic Club of Canada on May 14, 2009. Naylor is worried that Canada is still falling behind in many innovation metrics. He thinks research-intensive universities need to step up to fill this troubling gap. He also argues that ongoing misunderstandings of the role of government, business, and universities in innovation, which he discussed in his speech.

Now that Nortel is being broken into a million little pieces, what will happen to Canadian R&D spending?