Stagnant investments in training and research compromise Canada’s economic growth

Marc Johnson is professor of biology and Canada Research Chair in urban environmental science at the University of Toronto Mississauga. He is chair of the board of Support Our Science.

Canada massively under-invests in scientific training, research and development. We are falling behind in an increasingly competitive international landscape for developing talent and technology and capitalizing on innovation. This is hurting all Canadians, and only a major investment by the federal government can make up for lost ground.

In the past 20 years, Canada’s investment in R&D has steadily dropped as a percentage of gross domestic product (GDP). Over this same period, most G7 and OECD countries have increased R&D spending because research plays a major role in driving economic growth and solving societal challenges.

While the Trudeau government made a large investment in R&D in 2018, 19-per-cent inflation since then has all but erased these gains. Today, Canada invests just 1.55 per cent of GDP in R&D, which pales in comparison with peer countries such as the United States, which invests 3.46 per cent.

Governmental investments in R&D lead to large returns. Spending on training and research at Canada’s current rate of investment leads to an estimated annual rate of return of 30 per cent. This can be thought of as the total short-term return on investment, assuming innovations created from R&D have a useful lifetime of about seven years. That’s an impressive return that outpaces conventional investments, such as GICs that are yielding 5 per cent, the TSX that grew 8 per cent in 2023, or the S&P 500 that rose 24 per cent in the same year.

Through time, R&D investments lead to long-term growth in Canada’s economy. In fact, it is estimated that 7 per cent of our GDP ($160-billion in 2022 dollars) is derived from knowledge generated by research, science and technology. For every $1 we are investing in R&D, the economy is returning $4.52.

But Canada faces the reality that our stagnant approach to investing in training and R&D is jeopardizing the attraction and retention of talent. There are approximately 300,000 graduate students (doctoral and master’s) and postdoctoral scholars (researchers with a PhD) across this country. They work full-time conducting research while training to be leaders in technology, innovation and education. They tackle some of the world’s greatest challenges, including curing disease, mitigating climate change, designing electric vehicles, creating resilient economies and building livable societies.

Most research and innovation in Canada occurs at universities, where graduate students and postdocs outnumber professors by six to one. Graduate students and postdocs also outnumber federal scientists by seven to one. Without graduate students and postdocs, Canadian research and innovation would grind to a halt, and a pipeline of talent development would disappear.

Yet the Canadian government has not given graduate students a raise in over two decades, even with 54-per-cent inflation over this period. Since 2003, government scholarships for master’s degrees have remained at $17,500 a year. Doctoral scholarships have been stuck at $21,000 (”Postgraduate Scholarship-Doctoral”) and $35,000 (”Canadian Graduate Scholarship-Doctoral”) a year. Graduate students are also required to pay their tuition from these amounts, which further reduces their income. Meanwhile, the value of postdoctoral fellowships has only risen by just 12.5 per cent since 2003, to $45,000.

The government’s lack of increased funding for graduate students and postdocs has forced many young researchers into poverty. Lack of funding further places a filter on who can pursue higher-level training, selecting for individuals with external resources, such as wealthy parents, instead of selecting for talent and potential. The impact of our lack of funding for training graduate students and postdocs has passed the breaking point.

Canada’s poor investment into training and research is driving a massive brain drain of talent by the next generation of researchers. This exodus was under way before the COVID-19 pandemic, when a McGill study estimated that 38 per cent of all new PhDs from the social sciences and humanities left for other countries.

Shrinking compensation has pushed even more of our highly trained researchers out of Canada, and our investments in their training go with them, which I estimate costs our economy at least $740-million annually. In my own research group at University of Toronto, six of the past seven PhD graduates have left Canada for better jobs in the U.S.

The evidence is clear: The more we invest in the R&D system, the more we get back. So why is the federal government spending so little on research and training? While Canada watches the world go by, waiting for the inflationary storm to blow over, we are being left in the dust of countries more creative, industrious and ambitious.

Canada’s anemic approach to R&D is leaving large economic gains on the table to the benefit of other countries. Unless the Trudeau government invests now, it will have a long legacy of damage to Canadian society.

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