R&D Spending On Upward Trend

StatCan recently released a report indicating the direction research and development (R&D) spending by businesses in the industrial sector has been going over the past several years. With anticipated spending of $15.5 billion in industrial R&D in 2012 (an increase of 0.9% from 2011), there is a positive outlook for R&D spending for the new year. See the below graph for the 10 year trend of R&D spending in current dollars.

 

The main driver for the increase in R&D spending after years of decline, has been the direct growth of the manufacturing sector in Canada. It is expected in 2012 that the manufacturing sector alone will increase R&D spending by 3.1% from 2011 to a total of $7.6 billion. Costs associated to R&D will largely reside in wages and salaries, which has been the norm since 2006. Only 5% of 2012 anticipated R&D spending will be used towards purchases of land, building or equipment. Again this represents the norm of capital spending on a year to year basis since 2009. According to the most recent (2010) provincial data, Ontario ($6.8 billion) continues to be a hotbed for R&D spending followed by Quebec ($4.7 billion), with total R&D spending in 2010 being $15.1 billion. The Canadian government recognizes the positive benefits that R&D spending has on the economy and hence have offered several financial incentives to encourage companies to undertake R&D within Canada. As such, companies should strive to take advantage of the funding that is available to them in order to advance their business and to compete on a global stage.

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