Judging by the Fiscal 2023 data from our four key sectors - Universities, Colleges, Corporations and Hospitals - research activity was on a firm base last year. University research expanded by 6.0%, College research by 6.1%, Corporate by 12.4% and Hospital research by 8.4%. Notably, all grew faster than inflation. So, is Canada's R&D "glass" half-empty or half-full? What are the near-term prospects?

We know that annual R&D funding data are viewed in a rear-view mirror. They provide a good picture of past activity. But as financial prospectuses like to point out, they are no guarantee of future performance. And indeed, each of the four sectors faces unique challenges to maintain and expand their own pace of research activity.

Universities, Colleges and Hospitals: The challenge of declining enrolments

Our universities and colleges are currently being challenged with economic pressures stemming from declining enrolments - both domestic and foreign - and institutional incomes are falling along with them. This trend has broader implications for the research ecosystem. Students form the backbone of the higher education research workforce. As student numbers fall, so does the pool of available researchers - especially graduate and capstone students. In turn, that places constraints on the volume of research that professors can undertake. In the long term this can also reduce the number of research-oriented graduates who can go on to jobs in industry, government, academe, etc.

Smaller enrolments are also causing institutions to lay off faculty - often junior faculty with less seniority - who under normal circumstances would constitute the academic research workforce of the future. Declining university and college incomes also constrain institutions' ability to finance the indirect cost of research - the "hidden" costs that external funders do not cover. What we see emerging is a negative feedback loop for university and college research. This can also have cross-over effects on the hospital research sector, where many researchers are cross-appointed to universities and vice versa. So, all in all, a troubling situation for the academic and hospital sectors. A situation that is worth policymakers keeping an eye on lest circumstances run out of control. It is comparatively easy to eliminate research capacity, but a more difficult task to rebuild it.

Corporate Research: Growth amid caution

In the corporate sector, Fiscal 2023 saw a robust expansion of research among our leading firms. The top five corporate R&D performers spent a total of $6.0 billion on research. On the face of it, a respectable level of spending. However, twenty years ago the top five spenders devoted $5.2 billion to research, considerably more on an inflation-adjusted basis. So, while policymakers are seemingly fixated on startup and early-stage firms, it is really our top performers - large companies - that drive national performance.

The threat of broad U.S. tariffs on industry dominating today's headlines are clearly troublesome on many fronts. With U.S. multinationals comprising a substantial portion of Canada's leading R&D performers, trade disruptions could have far-reaching consequences for their research activities in Canada and their domestic counterparts.

The road ahead is uncertain, but careful navigation can ensure that Canada’s R&D glass remains more than half-full.

Keeping both eyes open

Time to keep one eye on the rear-view mirror and the other on the windscreen. Maintaining Canada's robust R&D ecosystem requires vigilance and proactive measures to address the emerging challenges facing universities, colleges, corporations, and hospitals. The road ahead is uncertain, but careful navigation can ensure that Canada's R&D glass remains more than half-full.