Higher education R&D spending as a percentage of GDP, G7 countries from 1991 to 2018

What is this metric and why is it important?

Higher education research and development (HERD) gives us a sense of how much an economy is spending on basic research and idea generation—both key contributors to social and economic innovation. We express HERD as a percentage of GDP to account for differences in economy size when making comparisons globally.

How is Canada doing?

  • At 0.64%, Canada ranks among the top spenders on HERD—well above the OECD overall rate of 0.41% but still behind a handful of European countries including Denmark (0.98%), Switzerland (0.93%), and Sweden (0.84%). 
  • Canada experienced rapid improvement in HERD from the mid-1990s to 2004, due largely to the creation of the Canada Research Chairs program and the Canada Foundation for Innovation. Since then, though, HERD has stagnated, allowing other OECD countries to narrow the gap by steadily increasing spending. Germany has increased HERD substantially, climbing from 0.4% in 2007 to 0.55% by 2018. 
  • Nova Scotia (0.99%) and Newfoundland and Labrador (0.98%) have the highest HERD among provinces, which places them slightly above Denmark (0.98%), the top-ranking OECD country. Alberta (0.45%) and Saskatchewan (0.43%) have the lowest HERD among Canada’s provinces.

Metric discussion

HERD refers to expenditures on research and development in the higher education sector, and includes spending, regardless of source, on research and research-related activities in the sciences, engineering, social sciences, and humanities.


HERD spending is important to innovation and inclusive growth for a number of reasons. First, research conducted at higher education institutions generates knowledge that underpins innovation in business, health, social services, and society more broadly. This includes research conducted in science and health-related disciplines that can lead to new technologies, medicines, therapies, and other innovations. It also includes social science and humanities research that can generate insights in marketing, management, and organizational effectiveness, and the knowledge and expertise needed to address the social, legal, ethical, and policy implications of new and emerging technologies. Moreover, research conducted at higher education institutions contributes to a better understanding of how inclusive (or exclusive) innovation and growth are, and what strategies and policies are needed to dismantle barriers and distribute opportunities and benefits more equitably.    


A second benefit of HERD is its contribution to advanced skills development among students who participate in it. Undergraduate and graduate students who are involved in research have opportunities to develop and apply knowledge and skills to real-world challenges. These opportunities prepare graduates for a range of research-related careers inside and outside of higher education, and benefit employers by ensuring that people with advanced research skills are available to support innovation.
 

Finally, HERD skills and knowledge are needed to understand, build on, implement, and operate new technologies and innovations in Canadian organizations—whether those technologies and innovations were developed in Canada or not. That is, HERD contributes to our capacity to absorb and derive benefit from innovation more broadly. 




Limitations

HERD data across countries must be read with caution. Although there are shared definitions and processes for collecting data, countries make different decisions about what to include and exclude from the final tally. For example, some countries appear to include an estimate for the monetary value of university researchers’ time, even if no additional R&D money is spent on this, while others do not.

© Inclusive Innovation Monitor 2021