Canada's universities are a key component of the national innovation system. Canadian university researchers are prolific publishers, and their research tends to be of a high quality, particularly in a number of fields. Whether measured as a share of total national R&D or as a share of GDP, the university sector's contribution to national R&D in Canada is larger than that of most OECD and G-7 countries. Funding for university R&D in Canada was fairly stable from 1990-97, but grew quite rapidly every year following 1998. While federal direct R&D funding and provincial government transfers to universities are the principal sources for university R&D funding, Canadian businesses fund university research to a higher degree than in other countries. Licensing revenues to Canadian university R&D are lower than in the U.S., but Canadian universities tend to produce research-based spinoff companies at a higher rate than other countries, including the U.S.
A number of studies suggest distinct aspects of university-business linkages. R&D cross funding between the Canadian business sector and universities is high by international standards, both as a share of total Canadian research and as a share of GDP. However, the proportion of Canadian businesses collaborating with universities on R&D is low by international standards. The state of university-business R&D collaboration in Canada was not ranked highly by the World Economic Forum Competitiveness Survey. Since there is strong evidence that businesses can benefit from research and innovation collaboration with universities, it is important to understand why these various sources give apparently conflicting conclusions on the state of inter-sectoral collaboration in Canada.
While Canadian universities tend to use spinoffs as a vehicle for commercialization of research more than in other countries, the number of spinoffs from Canadian universities has dropped in recent years. The rate of licensing of Canadian university research remains far below the rate of the U.S.
Canadian universities are not well represented in international university rankings (including private universities), suggesting poor international recognition or low institutional quality. An examination of institutional quality would need to explore the links between outcomes and resourcing, that is, the relative levels of funding of research universities in Canada and abroad.
The government plays a crucial role in funding knowledge generation and diffusion. Funding for university R&D comes primarily from government sources (either provincial or federal) and numerous government programs exist to foster R&D linkages between universities and business. Federal government agencies also carry out important scientific activities. These activities include research related to regulatory and information mandates of governments, and R&D on issues of strategic importance to the nation and to Canada's economy. Funding for Canadian government R&D has been fairly stable since the late 1980s, even in inflation-adjusted dollar terms. However, as a share of GDP, funding for government R&D has not kept pace with growth in the economy. As a share of GDP, Canadian funding for government R&D is well below the G-7 average, and the gap between Canada and the G-7 has grown in recent years.