Design Engineering

Report: Canada needs to boost innovation

By Design Engineering Staff   

General Innovation productivity research and development

OECD’s Economic Survey of Canada says lacking productivity growth and private R&D investment threaten standard of living.

According to OECD’s latest Economic Survey, Canada has weathered the global economic crisis comparatively well but will have to become more productive to sustain its high standard of living.

The report notes that a timely fiscal stimulus, low interest rates, a solid banking sector and revenues from natural resources helped Canada return to a stable growth path after the global economic crisis of 2008-09. With rising real estate prices and high household indebtedness now posing new risks, the OECD projects Canada’s economy will grow by around 2¼ per cent in 2012, and by around 2½ per cent in 2013.

The report identifies sluggish productivity growth as the main long-term challenge facing Canada’s economy. Canada’s overall productivity has actually fallen since 2002, while it has grown by about 30% over the past 20 years in the United States.

The OECD identifies two key priorities for meeting this long-term challenge. First, Canada needs to boost innovation. Canada has world-class research institutions and provides strong public support to business investment in research and development.


However, the business sector devotes only about 1% of GDP to R&D, compared with 2% in the U.S. and more than 2.5% in Japan, Korea and some of the Nordic countries. Canada remains a low performer on business investment in R&D, even when the large share of natural resource production is taken into account.

Second, the report recommends Canada invest further to improve both quality and access to tertiary education, to maintain the supply of highly skilled workers as the population ages.


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