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.

NorthBridge Consultants’ Canadian Business Blog is dedicated to bringing businesses news and information to help them identify and access the most appropriate government funding programs.

We offer opinions and insider information that can provide a pulse on government initiatives, the health of the Canadian economy, and firsthand thoughts from Canadian business owners.

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