Innovation Canada: A Call to Action

Innovation Canada: A Call to Actionidentified inputs to R&D-based businessinnovation, drawing on recent studies tosummarize the key facts and hypotheses.Innovation Input:Ideas and KnowledgeIn the context of this review, the acquisition bya company of ideas and knowledge refersprimarily to the output of R&D, whetherperformed in-house or sourced externally.There are, of course, many other channels bywhich businesses acquire the ideas thatstimulate innovation. In fact, surveys ofinnovating firms demonstrate consistently thatthe great majority of ideas originate withemployees, customers and other firms (Box 2.4).Nevertheless, converting these ideas intosomething of commercially significant value willoften require R&D to be undertaken, and almostalways when there are technical complexities tobe understood and mastered. Moreover, firmsengaged in R&D and close to the frontier ofrelevant technology are better placed to adoptor adapt innovations that originate elsewhere.The total value of all R&D performed inCanada in 2009 was just under $30 billion,or 1.92 percent of GDP. The business sectoraccounted for the largest portion of this amount($15.2 billion), followed by the higher education($11.1 billion) and government ($3 billion)sectors (OECD 2011). The history of R&Dspending (relative to GDP) of these three majorperforming groups is traced in Figure 2.5.As discussed earlier, the higher education andgovernment sectors are key players in Canada’sinnovation system and complement the role ofbusiness. Universities perform the great majorityof basic research, although basic and appliedresearch activities are increasingly intertwined.The R&D undertaken at colleges andpolytechnics is often focussed on helpingFigure 2.5 R&D Expenditure in Canada, 1981–2009 (percentage of GDP)1.41.2BERD HERD GOVERD1% of GDP0.80.60.40.201981 1985 1990 1995 2000 2005 2009Source: OECD (2011).2-12