The impact of foreign ownership on aggregate R&D intensity

Courriel: mepa.apme@ic.gc.ca Abstract Canada’s relatively low business expenditures on R&D (or BERD-intensity) has been attributed to the industrial composition of the Canadian economy, the relatively small size of the domestic market and of Canadian firms and to the relatively high incidence of foreign ownership in the Canadian economy. [...] Canada’s relatively low BERD-intensity has been attributed to the industrial composition of the Canadian economy, the relatively small size of the domestic market and of Canadian firms and to the relatively high incidence of foreign ownership in the Canadian economy. [...] The structural aspects of the Canadian economy that militate against a higher BERD intensity are, in the Conference Board’s view, the larger presence of foreign-controlled firms than other OECD countries, the smaller presence of high-tech firms, the high concentration of business R&D expenditures in a small number of firms, the larger number of small businesses that typically have fewer resources [...] Canada’s relatively weaker showing in terms of the BERD:GDP ratio is a consequence of the relatively small size of these industries, the low R&D-intensity of the Motor Vehicles industry in Canada and the relatively low R&D-intensity of a number of “medium-tech” manufacturing industries in Canada. [...] They cite as determinants cash flow, size (with the effects of the two being difficult to disentangle), the incidence of unionization, the intensity of competition in the relevant product market, government subsidies, tax credits and R&D spending and the R&D spending of nearby firms.