Canada falling behind in R&D, report warns

A new study of Canada’s science, technology and innovation (STI) landscape warns that the country’s future is under threat as it falls further behind its international counterparts in the world of research and development. Calling Canada “an innovation laggard on multiple fronts,” the report released this week by the Council of Canadian Academies (CCA) says its analysis found ample evidence that the country needs to improve its research and development efforts — and ensure that the results are put to better use — if Canadians are going to preserve their place on the world stage. 

University research and training provide two of the few bright spots in the report. While government and business are doing less, post-secondary institutions are carrying a greater R&D load — investing more in research, publishing more academic papers and producing more graduates over the past decade. 

“Canada’s greatest natural resource is its talented, well-educated and diverse population,” it says, pointing out that 63 per cent of Canadians between ages 25 and 64 have a post-secondary degree. But it warns that an educated population needs the opportunity to fulfill its promise. 

“Our greatest weakness is an economy that consistently underuses and undervalues the capacity of Canadians to create prosperity for future generations.”  

Research spending lags 

The State of Science, Technology and Innovation in Canada, 2025 is the CCA’s fifth assessment of the country’s STI performance since 2006 and measures the country’s progress against other G7 nations and the 38 members of the Organization for Economic Co-operation and Development (OECD). Since its previous report was published in 2018, Canada has fallen behind on many fronts, most importantly on research spending. 

For example, national gross domestic expenditure on research development has grown only 1.8 per cent annually (between 2011 and 2023) compared to the OECD’s 3.2 per cent compound annual growth rate. 

And, among the comparator countries, Canada is only one of three whose R&D spending “intensity” has dropped since 2000. (Intensity is calculated as the percentage of GDP spent on R&D.) In 2023, its R&D intensity metric was the second lowest of G7 countries, followed only by Italy. 

Universities pick up the slack 

As R&D spending by businesses has shrunk, universities have taken up the slack, with institutes of higher education contributing 35 per cent of Canada’s gross domestic R&D expenditures — much higher than the OECD’s 16 per cent. (In Canada, business finances about 59 per cent and government, 6 per cent.)  

Canadian universities provide a high amount of self-funded research compared to other countries. However, businesses also supply R&D funding to universities, mainly to members of Canada’s U15 association. The amount of business funding channelled to U15 universities has risen steadily (by 44%) since 2010.

Too often, the report says, universities’ successes are not put to good use. Many of Canada’s post-graduate researchers leave the country for better opportunities, often to the United States for higher salaries. 

The CCA’s chair, Ilse Treurnicht, told University Affairs, “We are losing highly qualified graduates to opportunities abroad, driven by wage disparities and limited research career prospects.” 

Business start-ups struggle 

Business incubators and accelerators designed to help entrepreneurs commercialize academic research often fail to find the investors and customers needed to scale up new ventures, creating jobs and wealth. In 2022, two-thirds of Canada’s 1.2 million enterprises had fewer than five employees, and 85,000 enterprises folded in 2021. (On the good news side, about 107,000 new enterprises were launched in 2022.) 

The report uses patent and scientific publication data to help assess the productivity of university research, reflecting Canada’s growing pool of both talent and knowledge. It notes that Canada’s publication volume rose 9 per cent between 2012 and 2023 — placing it in 12th place internationally, albeit far behind China, Russia and India.  

Four universities (and their affiliated hospitals and clinics) accounted for about 31 per cent of the country’s research publications — University of Toronto (12.4 per cent), University of British Columbia (7 per cent), McGill University (5.7 per cent) and University of Alberta (5.6 per cent).  

Patent registration is on the rise although the report notes that those innovations often are exported after failing to find traction domestically. Between 2012 and 2023, Canadians filed over 58,000 patents in the U.S. Patent and Trademark Office, although the growth of its application rate was significantly behind that of the U.S. and South Korea among others. 

Quality of life at risk 

The 2025 CAA assessment delivers a stern warning that Canadians must do better in the world of science, technology and innovation if we want to maintain our quality of life. While the 14-member expert panel clearly attributes some of the country’s lost ground to the COVID-19 crisis, it points to other immediate challenges, including low productivity issues, rocky Canadian-American relations and the uncertainty posed by Artificial Intelligence in all aspects of life. It also notes the irony that while much of AI development came out of Canadian campuses, the country’s AI advantage is slipping as other countries ramp up their applications of the technology. 

The report also cautions that the country’s thriving university STI ecosystem is facing uncertainty. Immigration barriers to foreign students will reduce an important revenue stream and hurt Canada’s international research status at a time when American universities are losing their appeal to both students and faculty. Global collaboration is also under threat due to security concerns with countries such as China and Iran.  

Until government and business improve their STI performance, universities will have difficulty attracting top talent to their laboratories; Canada, the report frets, is losing its competitive edge. 

The CCA’s Dr. Treurnicht stressed the importance of bringing elements of the STI ecosystem together. “Strengthening partnerships between academia and industry is vital to drive innovation and ensure our long-term competitiveness.”