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					   C h a p ter 2
Progress and challenges




             l e ve ra g e s u c c e s s




                             Photo: University of Saskatchewan
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T
          he significant R&D
          investments made by all           The federal government committed
          sectors over the last decade
reflect the growing importance of           $15 billion to basic research between
research for Canada’s international
competitiveness and the economic
                                            1997-98 and 2004-05
prosperity and quality of life of
its citizens. However, eight years                                             GENOME CANADA
                                                  INDIRECT COSTS               $435 million
after the beginning of federal                         $670 million
government reinvestment in                                                     CANADA RESEARCH
                                                                               CHAIRS
R&D and a few years after the                                                  $900 million
national Innovation Summit held
in 2002, government officials,
policy-makers and politicians                                                               So far, an estimated
are asking important questions                                              $15 billion     $12.4 billion has
                                            CANADA FOUNDATION
regarding the return to date on                 FOR INNOVATION                              been disbursed…
recent R&D investments as well                        $3.65 billion
as what is required to sustain the                                                                                 PROGRAM OPERATING
                                                                                                                   EXPENDITURES
momentum. Given the magnitude                                                                                      $0.6 billion
of the investment, these questions                                                                                   FUNDING ALLOCATED
are both justified and timely.                                                                                       TO OTHER SECTORS
                                                                                                                     $0.8 billion
                                             GRANTING AGENCIES
                                                      $9.4 billion
To help answer some of the
questions regarding the return on
federal R&D investments, AUCC
analyzed federal funds committed                                                               ...and $11 billion
to “basic research”1 between                                                                   (88 percent) has
                                                                                               flowed through
1997-98 and 2004-05, and, in                                                                   to universities
particular, the portion that was
                                           Source: AUCC estimates
invested in university research. The
federal government used the term
“basic research” in its 2004 Budget                            and the Social Sciences and Humanities
Plan and “basic science and technology” in                     Research Council. The other one-third was
its 2004 Speech from the Throne to describe                    divided among the Canada Foundation for
its investments in research made through the                   Innovation ($3.65 billion); the Canada Research
granting agencies, the Canada Foundation                       Chairs Program ($900 million); indirect costs
for Innovation and “other initiatives to create                support ($670 million); and Genome Canada
leading-edge capabilities”.2 Between                           ($435 million). Of the total amount, an estimated
1997-98 and 2004-05, the federal government                    $12.4 billion was disbursed by 2004-05, of which
committed $15 billion to these activities.                     approximately $11 billion flowed to universities.
                                                               The remaining funds were distributed almost
Close to two-thirds of this investment, or                     evenly between program operating expenditures
$9.4 billion, was allocated to the three federal               and grants to other organizations that engage
research granting agencies – the Canadian                      in basic research.
Institutes of Health Research, the Natural
Sciences and Engineering Research Council


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                 1
        Of the $1 billion invested in university research since
        1997-98, almost 70 percent of the funds were received
        only in the last four years

              Millions of current dollars   1997-98   1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05                       TOTAL


               Granting agencies               676      763       870           950   1,041     1,155       1,283      1,388        8,126
           Canada Foundation for                 0      27        112           180    227        319         342        258        1,465
                     Innovation
          Canada Research Chairs                 0       0           0          13      59        103         146        188         509
                 Genome Canada                   0       0           0           1      36          49         69             68     223
                      Indirect costs             0       0           0           0     200           0        225        245         670

                                 Total         676     790        982      1,144      1,563     1,626      2,065       2,147       10,993

        Beginning of federal reinvestment in research
                  Canada Foundation for Innovation                                                              Indirect costs – permanent program

                                                       Canada Research Chairs
                                                                                          Indirect costs – one-time payment
        Source: AUCC estimates
                                                                                          Genome Canada


        Of the $11 billion distributed to universities                      Canadian universities are better positioned
        between 1997-98 and 2004-05, almost 70                              than they were prior to 1997 to compete for
        percent was received only in the last four                          research talent, in part due to the development
        years. While time to discovery can differ                           of world-class research infrastructure and
        significantly from one research project to                          universities’ increased engagement in cross-
        the next, it often takes more than a decade                         sectoral and international research initiatives.
        to generate societal or economic impacts.                           These improvements are “branding” Canada as
        Consequently, many of the long-term benefits                        a desirable destination for researchers and are
        of these investments have yet to be realized.                       leading other countries to consider emulating
                                                                            some of Canada’s research policies and
        There are, however, encouraging signs that                          programs. They are also enabling Canada to
        recent federal investments in university research                   make progress towards some of the innovation
        are already beginning to pay off – first and                        targets set at the time of the national Innovation
        foremost in terms of strengthening Canada’s                         Summit. While challenges remain to ensure
        overall research environment. As a result,                          Canada’s future competitiveness, it is possible


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to document the considerable progress made            1997 and 2001, faculty numbers rose from
since a decade ago. These improvements in             33,700 to 34,900, and then increased more
the research environment are important in that        rapidly to reach about 38,000 nationally in
they enable Canada to attract highly qualified        2004. Today, while there are still stories of
personnel and cultivate ideas – two of the most       researchers leaving Canada, there are also
important resources required for economic             more frequent accounts of “brain gain”.
prosperity and quality of life in the 21st century.
                                                      While these recent gains are encouraging,
                                                      they must be considered within the context
Renewal of university faculty                         of enrolment increases and international
and young researchers                                 competition for research talent. There are
                                                      currently about 4,000 more faculty members
In its 2002 publication, Trends in Higher
                                                      than in 1997, but student enrolment has grown
Education, AUCC documented a massive
                                                      by almost 200,000 over this same period
faculty renewal challenge, estimating that
                                                      and enrolment pressures will likely continue
universities may need to hire as many as 30,000
                                                      for the foreseeable future.6 Key competitor
to 40,000 new faculty members between 2001
                                                      countries face similar faculty demographics,
and 2011.3 Of these, 20,000 are needed to
                                                      enrolment growth and pressures to expand
replace retiring faculty and as many as 10,000
                                                      their university research efforts. As a result,
to 20,000 could be required to respond to
                                                      they too are stepping up their efforts to recruit
anticipated enrolment growth and the demand
                                                      and retain scholars. Consequently, Canada
for more university research. If the upper
                                                      faces the major challenge of ensuring the
end of these projections is reached, Canada’s
                                                      country can deliver the faculty required to
faculty numbers will need to increase from
                                                      respond to both growing research demands
34,900 in 2001 to almost 55,000 by 2011.
                                                      and to the expectations of Canadians for
The challenge of replacing these faculty              greater student access to a research-enriched
members over the next several years is a              and internationalized university education.
significant one. In 1992, there were 37,000
                                                      In this global race for talent, federal initiatives
full-time faculty members on Canadian
                                                      such as the Canada Research Chairs Program
campuses. However, between 1992 and
                                                      are instrumental in encouraging both
1997, this number fell by almost 10 percent
                                                      established researchers and promising young
to 33,700, as provincial government funding
                                                      researchers to choose Canadian universities.
for university operating budgets decreased by
                                                      Since the inception of the program, 1,509
a national average of 20 percent.4 During
                                                      university faculty members have received
this period, public concern mounted as
                                                      either a renewable Tier 1 chair ($200,000 a
media headlines and concerned business and
                                                      year for seven years) or a renewable Tier 2
opinion leaders noted that the country was
                                                      chair ($100,000 a year for five years). Of these
suffering a “brain drain” – losing top scholars
                                                      senior and junior chairs, 474 were awarded to
to other countries, primarily the U.S.5
                                                      faculty repatriated or attracted from abroad.7
Since 1997, provincial government reinvestment
                                                      Increased support for the direct costs of
in university operating budgets, combined
                                                      research through the federal granting
with federal programs designed to attract
                                                      agencies, the establishment of a permanent
and retain researchers in a highly competitive
                                                      program to fund the indirect costs of
international marketplace, have been critical
                                                      research and the creation of CFI have also
to reversing the downward trend. Between
                                                      helped Canada attract and retain faculty


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        members. These investments provide more                     Between 1990 and 2004, the Canadian
        competitive support for researchers and                     economy generated an additional 400,000 jobs
        encourage young faculty members to engage                   for master’s and PhD graduates – a growth of
        in research. In recent years, all three federal             70 percent over that period.13 This growth is
        granting agencies have reported substantial                 expected to continue. Some of this demand
        increases in the number of new applicants.8                 will be met by attracting talent from abroad.
                                                                    However, it is also necessary for Canada
        Government funding is also instrumental in                  to develop more of this talent at home.
        encouraging Canada’s university graduates
        to pursue master’s and PhD studies. When
        government funding and faculty numbers                      Improvements in research
        declined in the mid-1990s, PhD enrolment                    infrastructure
        stagnated between 1994 and 1997 and the
        number of PhDs awarded leveled off in                       Renewing university faculty ranks and
        1997.9 Recent increases in provincial funding,              attracting young researchers has been facilitated
        combined with renewed federal support for                   by concurrent investments in university
        graduate students through scholarships and                  research infrastructure. Canadian researchers
        research funding, have contributed to an overall            report that a significant proportion of research
        increase in graduate student enrolment of                   infrastructure has benefited from government
        about 25 percent between 2001 and 2004.10                   investments since 1997 and has been upgraded
                                                                    from sub-standard to excellent or world-class.14
        The Canada Graduate Scholarships program,                   This represents a major shift from the mid-
        introduced in the 2003 federal budget, will                 1990s, when much of Canada’s research
        enable the federal research granting agencies to            infrastructure was outdated and at risk of
        collectively award an additional 2,000 master’s             failing to meet health and safety standards.15
        and 2,000 PhD scholarships annually by 2006-
        07. These awards, which will be worth a total               These infrastructure deficits were seriously
        of $105 million a year when fully phased in, are            eroding Canada’s ability to educate and attract
        in addition to other scholarships, bursaries and            quality scholars, to build R&D capacity, and
        fellowships provided by the granting agencies.              to compete on the world stage. Observing
        Further support is available through research               the state of university research infrastructure,
        apprenticeships funded through the three                    the National Advisory Board on Science
        agencies’ direct grants to faculty members.                 and Technology concluded in 1995 that
                                                                    “if Canada is to preserve the quality of the
        Educating more master’s and PhD students                    research conducted in universities, as well as its
        is important to ensure that Canada meets                    international competitive advantage in this area,
        its labour market requirements for highly                   mechanisms must be found to modernize and
        qualified personnel. While some of these                    maintain Canada’s research infrastructure.”16
        new graduates will help replenish the ranks
        of Canadian faculty, historically more than                 Recognizing this, the federal government
        two-thirds of PhD graduates have worked                     established the Canada Foundation for
        outside of academe.11 As advanced degree                    Innovation in 1997 to fund research
        holders are needed by all sectors, particularly             infrastructure at universities, affiliated teaching
        in occupational categories such as management               hospitals, colleges and not-for-profit institutions.
        and natural and applied sciences, government                An independent, arm’s-length foundation, CFI
        investments are critical to ensure that Canada              allows for long-term planning for Canada’s
        has the necessary pool of graduates.12                      research infrastructure. Infrastructure grant


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submissions are administered through a                            The largest of these projects is the University
rigorous, competitive peer-review process that                    of Saskatchewan’s Canadian Light Source,
includes international scholars and is overseen                   which houses one of only a dozen third-
by an independent board of directors.17                           generation synchrotrons in the world.19 The
                                                                  CLS probes the physical structure of materials
Since its inception, CFI has allocated close                      to the level of atoms and molecules and
to $2.6 billion to almost 4,300 research                          will provide such benefits as new medical
infrastructure projects at about 130 research                     discoveries, the identification of toxic
centres and institutions across Canada. Given                     substances and advances in nanotechnology.
that CFI funds 40 percent of the costs of a                       This national facility represents a major
project, institutions are expected to contribute                  scientific collaboration of government, private
and to attract additional funding from                            sector and academic partners from across
provincial governments, the private sector                        Canada. Overall, almost $174 million has
and other partners. Close to $3.9 billion in                      been invested in the CLS by all sectors.20
additional support has been attracted from
outside the institutions, for a total of almost                   The CLS and other large-scale CFI projects
$6.5 billion allocated to Canadian research                       contribute significantly to the economic and
infrastructure over the past seven years. An                      social development of their surrounding
additional $379 million has been provided                         region, both in the construction phase and
in infrastructure operating support.18                            over the longer term. In the case of the
                                                                  CLS, construction of the building and the


10 largest CFI contributions to Canadian
infrastructure projects
        Lead institution                                Project                        CFI contribution
                                                                                       ($ millions)

   University of Saskatchewan   Canadian Light Source                                  56.4
   Carleton University          An International Facility for Underground Science      38.9
   University of Victoria       NEPTUNE Canada (cable-linked seafloor observatory)     31.9
   University of Toronto        The Centre for Cellular and Biomolecular Research      30.8
   B.C. Cancer Agency           Centre for Integrated Genomics                         27.8
   Université Laval             A Canadian Research Icebreaker                         27.6
   McGill University            The McGill University and the McGill University        27.2
                                Health Centre Life Sciences Complex
   Mount Sinai Hospital         Toronto Centre for Comparative Models                  26.8
                                of Human Disease
   Institut national de la      Advanced Laser Light Sources (ALLS)                    21.0
   recherche scientifique
   University of Ottawa         National Site Licensing Project                        20.0



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        synchrotron itself created hundreds of jobs in              Realization of these and other outcomes that
        Saskatoon. Major scientific conferences are                 result from R&D investments will depend on
        being attracted to the region as is new research            the strategy Canada adopts to fund research
        talent. Staff is expected to grow to 125 by the             infrastructure over the next decade. By the end
        end of 2005 and hundreds of Canadian and                    of 2006, CFI will have allocated the remaining
        international academic and private sector                   funds available to support new projects and
        researchers use the facility every year.                    upgrade existing infrastructure. Decisions will
                                                                    therefore need to be made on how to fund new
        In addition, scholars report that CFI investments           infrastructure in emerging areas of research and
        facilitate cross-sectoral and international                 provide on-going operating and maintenance
        collaborations. About 80 percent of project                 support for the projects established by 2006.
        leaders reported that CFI infrastructure had
        a significant or very significant impact on
        inter-institutional collaborations and intra-
        institutional linkages among researchers.21 In
        2003-04 alone, more than 20,000 researchers                 Canada needs to
                                                                    keep its researchers
        and 3,800 post-doctoral fellows from Canadian
        universities used CFI-funded infrastructure to


                                                                    at the cutting-edge
        advance their research, as well as more than
        2,200 researchers from the domestic private and
        public sectors and close to 3,700 researchers
        from outside Canada. An additional 29,000
        trainees made use of the infrastructure to
        enhance their training through research.22
                                                                    of innovation
        CFI funding, in combination with federal
        research granting agencies’ support for the                 Investments in research infrastructure represent
        direct costs of research, enables Canada to                 an essential and ongoing cost of doing business
        participate in major international projects such            in an internationalized R&D environment.
        as NEPTUNE. This project, jointly led by                    State-of-the-art equipment often has substantial
        the University of Victoria and the University               operating or maintenance costs or quickly
        of Washington and involving 12 Canadian                     becomes obsolete. Sustained support for this
        universities and other partners, will use fibre             aspect of the research enterprise is also vital to
        optic cables to study a 200,000-square-kilometre            a country’s ability to attract leading researchers,
        area known as the Juan de Fuca tectonic plate,              as world-class infrastructure is a magnet for
        a region off the coast of British Columbia                  global talent. For example, CFI project leaders
        prone to undersea earthquakes. To date, CFI                 report that infrastructure investments have
        has approved $32 million for the project and                helped recruit close to 3,200 new university
        the B.C. Knowledge Development Fund is                      faculty members (including more than
        providing another $30.5 million. The balance                1,200 international scholars), as well as
        of the funding for this $300-million project                retain more than 4,000.23 Canada, like other
        is coming from American sources. Currently                  countries, will need to assess how best to keep its
        under construction, NEPTUNE is expected                     researchers, and by extension its infrastructure,
        to become operational in 2007 and will lead                 at the cutting-edge of innovation.
        to better management of fish stocks as well as
        earlier warning of earthquakes and tsunamis.



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Increased collaboration                               services to enhance Canada’s technology
                                                      commercialization infrastructure, capacity and
Recent investments in mechanisms such as              collaboration and will serve as a liaison for
CFI have improved universities’ ability to            exchanges with government and industry.24
facilitate collaborative research efforts, thereby
enhancing the effectiveness and efficiency of         Canadian universities engage the private sector,
Canada’s research enterprise. Over the past           governments and other partners in research
10 years, Canada has overcome many of the             initiatives by serving as a platform for collaborative
challenges of the mid-1990s, when formal              R&D and by conducting a significant amount of
initiatives to foster productive partnerships         research for other sectors. The share of private
were primarily those supported by the federal         sector R&D investment attracted by universities
research granting agencies and the Networks           in Canada is the highest of the G7 countries.25
of Centres of Excellence program. Canadian            Altogether, more than $5 billion worth of
universities’ ability to establish the domestic and   research has been conducted by universities for
international linkages needed to compete on           the Canadian private sector in the last decade,
the world stage was further limited by cutbacks       with private sector investments in university
to the federal granting agencies’ budgets.            research more than doubling in the last seven
                                                      years alone.26 Included in these investments is
Canada’s universities are now more effectively        private-sector support for more than 90 NSERC
and frequently collaborating with each other,         Industrial Research Chairs on campuses across
partnering on projects with other sectors, and        the country. These chairholders and their research
working with international counterparts. On           teams help universities both advance basic
the national front, for example, computers at         science and contribute to improved processes and
universities in all regions are increasingly being    products for businesses and regional economies.
linked in high-performance grids that pool
processing power and make super-computing             Universities also facilitate collaborative R&D
available across the entire network. Similarly, 74    by participating in federal granting agency
institutions across the country participate in the    initiatives that actively promote cross-sectoral
Canadian Research Knowledge Network, which            research activity. These include the Collaborative
provides researchers with desktop access to a         Research and Development grants and the
wide array of electronic journals that are critical   Research Partnership Agreements at NSERC;
to their research, but that may be beyond             the Major Collaborative Research Initiatives,
the budgetary reach of any one institution.           the Aboriginal Research Grants, and the
                                                      Community-University Research Alliances at
Universities are also collaborating to manage         SSHRC; and the Collaborative Health Research
intellectual property resulting from research         Projects and institute-led initiatives at CIHR.
and to ensure its successful transfer to the          In addition, universities host 21 Networks of
marketplace. In addition to participating in          Centres of Excellence. In recent years, these
commercialization networks in every region of         networks have significantly increased their
the country – Springboard in Atlantic Canada,         private sector and government participation.
Les BLEUs in Quebec, onSETT in Ontario                Between 1997-98 and 2003-04, the number of
and WestLink Innovation Network in the                private sector partners involved increased by 90
western provinces – 84 universities created the       percent, while federal partners from departments
national Alliance for the Commercialization           and agencies increased by 160 percent.27
of Canadian Technology in late 2004. ACCT
is intended to implement programs and



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        On the international front, Canada has taken                and among sectors and to ensure that these
        important steps forward. Canada’s international             initiatives incorporate enhanced support for
        research collaboration, as measured by the                  the international dimension of partnership.
        percentage of publications involving co-                    In particular, support must be extended to
        publication activity, continues to grow steadily            increasing Canada’s research capacity for
        and exceeds the world average.28 Canada has                 bringing about change through collaborative
        the highest rate of international co-publication            research with partners in the developing world.
        with the U.S. – the world’s largest producer of
        research – and is diversifying its co-publication           International presence
        activity through collaborations with researchers
        in Europe as well as emerging countries in                  and influence
        Asia and in Central and South America.29                    Inter-university, inter-sectoral and international
                                                                    collaborative activities, facilitated by recent
        Canada’s level of collaborative engagement
                                                                    investments in direct and indirect costs,
        in international development research and
                                                                    infrastructure and human resources, are helping
        knowledge transfer has also grown over the
                                                                    brand Canada as a preferred international
        last decade. This has been encouraged by
                                                                    destination for research and as a key R&D
        programs such as the University Partnerships in
                                                                    partner. The university-based research
        Cooperation and Development program, which
                                                                    programs Canada has established over the past
        is administered by AUCC on behalf of the
                                                                    eight years have been instrumental in achieving
        Canadian International Development Agency.
                                                                    this recognition, garnering international
        Through the program, 129 partnerships were
                                                                    attention and interest from government
        forged between Canadian universities and
                                                                    policy experts, decision-makers and the
        higher education institutions in developing
                                                                    international talent Canada seeks to attract.
        countries to address pressing socio-economic
        and environmental concerns in these regions.
        Since the 1970s, Canadian universities have
        been engaged in a total of close to 2,600
        partnerships in 136 countries worldwide.30                  The reputation for
        Through these projects, at least 265,000
        people in developing countries improved their               research excellence
                                                                    built to date is the
        knowledge and skills in a range of sectors such
        as business administration, health sciences


                                                                    result of many
        and basic education and teacher training.31

        In the current global R&D environment,

                                                                    years of increased
        governments are increasingly recognizing
        that they must facilitate collaboration among


                                                                    investments
        domestic research performers to compete
        effectively on the international stage. As well,
        R&D performers understand that being
        internationally competitive requires them to be
        internationally collaborative. The challenge to
        Canadian research policy and funding agencies               Canada’s growing global R&D reach and
        is twofold – to build upon existing mechanisms              influence is measured not only by its co-
        that facilitate collaboration among universities            publication activity, but also by its record



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of publication. While Canada represents
only a fraction of the world’s population
(approximately 0.5 percent), it contributes           Much remains to
                                                      be done to ensure
4.5 percent of scientific publications.32 Overall,
Canada ranks sixth in the number of scientific


                                                      Canada maintains
publications produced in the world and in
the categories of environment and ecology,
psychiatry and psychology, social sciences
and economics and business, the country
ranks among the top three in the world.33             and enhances
In terms of citation record, another important
measure of research influence, Canada ranks
                                                      its R&D status
sixth in the world.34 In almost all fields, Canada
easily surpasses the world average number of
citations per paper, and in some fields, it exceeds   partners that Canada is in the “research game”
it by far.35 This speaks to the importance            for the long term. While developing such a
accorded by researchers in other countries to         reputation takes many years, it can be quickly
the work published by Canadian researchers.           lost, particularly among the most sought-after
For example, scientists at the Sudbury Neutrino       R&D talent, if the country demonstrates any
Observatory (or SNO), a major international           hesitancy regarding its long-term commitment
particle facility for studying the sun’s core,        to internationally-competitive R&D support.
working in collaboration with other partners
wrote three papers that were recently ranked          Canada’s ability to maintain and enhance its
as the most cited physics papers in the world.36      international status will depend in large part
Overall, Canada is one of eight countries that        on the knowledge-based relationships it fosters
collectively account for about 85 percent of          with other nations, both its current economic
the most cited publications in the world.37           partners and those who are rapidly emerging
                                                      as future leaders. Countries like Brazil, China,
Canadian researchers are also successfully            India and Mexico are new competitors on the
attracting substantial international funding.         international stage, and traditional competitors
For example, in the four years between 2001           from the OECD and Pacific Rim are stepping
and 2004, the amount of funding from the              up their own R&D investments. Canada
National Institutes of Health in the U.S. coming      needs to increase collaboration with these
to Canadians increased by more than 150               new players and enhance its own investments
percent.38 In 2004 alone, Canadian researchers        and commitment to R&D to preserve its
received $65 million in funding from NIH.             competitive edge and international stature.

These developments are encouraging and
help brand Canada as a place of research
                                                      Universities’ innovation targets
excellence. However, much remains to be done          Like many of its key competitor countries,
to ensure the country maintains and enhances          Canada and its universities have set public
its global R&D status. The reputation for             targets for R&D and have committed to
research excellence built to date is the result       periodically assess progress toward these goals.
of many years of increased investments and            At the time of the federal Innovation Summit in
sound policies. These send the right signals          November 2002, AUCC reiterated its member
to both domestic and foreign researchers and


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        institutions’ commitment to triple
        their collective commercialization             Universities are on track to meet their
                                                       collective target to triple commercial-
        performance by 2010. AUCC
        also indicated that universities,
        supported by partners from
        all sectors, would double
                                                       ization performance by 2010
        the amount of research they                                      TOTAL GROSS COMMERCIALIZATION INCOME EARNED
        performed by this same year.                                     BY UNIVERSITIES, 1999, 2003, 2010
                                                                    80
        These targets, and others detailed
        in the 2002 AUCC Action
        Plan, were set in response to                               70
        those identified by the federal                                                                            70.2
        government in the 2001 Speech                               60
        from the Throne and as part of
        the Innovation Strategy released                            50
        in 2002.39 The overarching
                                                                                                  51.0
                                                       $ millions




        federal goal was for Canada to                              40
        rank among the top five R&D
        performers by 2010. The federal
                                                                    30
        government further committed
        to doubling its investments in
        research by this same date.                                 20
                                                                                 23.4
        Tripling of commercialization                               10
        To measure universities’ collective
        progress in meeting their target                        0
                                                                                  1999             2003          2010 TARGET
        of tripling commercialization
                                                         Source: Statistics Canada and AUCC
        performance, AUCC developed
        an indicator called Total Income from
        the Commercialization of Intellectual                                    To triple this income from 1999 to 2010,
        Property. This measure is based on data reported                         universities and their affiliated institutions
        every two years in the Survey of Intellectual Property                   will need to earn more than $70.2 million
        Commercialization in the Higher Education Sector                         from their commercialization activities by
        conducted by Statistics Canada. The tripling
                                              40                                 2010. Universities have made significant
        indicator is an aggregate of gross income earned as                      progress and are on track to achieve
        a result of royalties from licenses, equity disposed                     the tripling target, possibly in a shorter
        of by institutions, dividends paid to institutions                       timeframe than initially predicted. The
        and reimbursement of patent costs. Equity held                           most recent results of the Statistics Canada
        is not reflected in the measure, given market                            survey show that between 1999 and 2003,
        fluctuations and the difficulty of assessing the value                   universities more than doubled their total
        of these public and private holdings accurately                          gross income from commercialization,
        and comparatively. In 1999, the base year for
                              41                                                 from $23.4 million to $51 million.43
        the tripling target, total income derived from
        the commercialization of university intellectual
        property was estimated at $23.4 million.42


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Universities are also making
considerable progress on a
number of other measures
                                            Universities are increasing
documented in the survey.                   their commercialization capacity
While not subject to a tripling
target, they provide a more                Indicator                               1999         2003       % increase
complete picture of the range
of commercialization activities            Operational expenditures $22 million              $36.4 million 65
undertaken by universities.                on IP management
Institutions are strengthening             Disclosures                        893            1,133          27
their commercialization capacity
by investing more in their
                                           New patent applications 656                       1,252          91
technology transfer offices,               Number of spin-offs                681            850            25
promoting more disclosures,                New licenses                       232            422            82
supporting a growing number
                                           Value of industrial                $153.8 million $283 million   84
of patent applications, starting           research contracts
more companies, promoting
more licenses, and conducting            Source: Statistics Canada and AUCC calculations

more research in collaboration
with the private sector. The                                     Reaping these commercialization benefits
federal Indirect Costs Program and initiatives                   and achieving the tripling target ultimately
such as the tri-agency Intellectual Property                     depend on the presence of, and support for,
Mobilization Program, NSERC’s Idea to                            highly qualified personnel. It is through high-
Innovation Program, and CIHR’s Proof of                          calibre researchers and graduate students
Principle Program, which provide support                         working in a well-resourced environment that
for the commercialization of university                          innovative ideas are productively pursued.
research, are all contributing to this progress.                 As only a small number of discoveries will
                                                                 lead to company formation or licensing deals,
While the tripling target and these additional
                                                                 attaining the tripling target also depends
indicators are important in that they speak
                                                                 on access to technology transfer experts,
to enhanced capacity to commercialize
                                                                 experienced entrepreneurs and motivated
products and processes, even collectively they
                                                                 venture capitalists. A key challenge, therefore,
are only a partial proxy for the economic
                                                                 will be to ensure that Canada educates,
and social benefits that commercialization of
                                                                 retains and attracts a growing number
university research generates for Canada and
                                                                 of researchers and industry experts.
the world. Commercialization contributes to
improved industry-university relations, job
                                                                 Doubling of research
creation, increased export sales and local
socio-economic development. This generates                       The second target set in the AUCC Action
wealth for Canada and improves Canadians’                        Plan – the doubling of research performed
quality of life through innovations brought                      by universities and their affiliated institutions
to market. For example, in 2002, university                      – will be measured according to the cumulative
spin-off companies alone employed almost                         dollar value of investments by all sectors
20,000 people full-time and generated                            in university R&D. This measure provides
more than $2.5 billion in revenues.  44                          a proxy estimate of the total amount of
                                                                 university research conducted, based on both



               A s s o c i at i o n o f Un ive r s it i e s a n d Co l l e g e s o f C a n a d a                        1
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        dollars attracted from external
        partners and those allocated by                Universities are currently on track to
                                                       double their R&D activities by 2010
        universities themselves to their
        research activities. By factoring
        in the inflation rate, these data
                                                                       DOLLARS ATTRACTED AND ALLOCATED BY UNIVERSITIES FOR
        can be projected to establish the                              R&D ACTIVITIES, 2000-2010
        investments required to double                    15,500
        the research performed by
        2010. Using this approach, an                     14,500
                                                                                                                                     $14.2 B
        estimated minimum investment                      13,500
        of $14.2 billion from all
        sectors, including universities,                  12,500
        will be required by 2010.45
                                                          11,500
                                                                                 Base year: 2000
                                                  $ millions




        Since 2000, the base year for                     10,500
        the target, universities and
        their affiliated institutions have                     9,500
        increased their research activities,
        as measured in dollars invested in
                                                               8,500
                                                                                                                     Targeted level of R&D activities
        research, from $5.8 billion to $9.3                    7,500                                                 to achieve doubling
        billion in 2004. This represents                                                                             Current level of R&D activities
        an increase of 61 percent in                           6,500
                                                                                      $5.8 B
        four years.46 Thus, universities
                                                               5,500
        are currently on track to double
                                                                        2000
                                                                               2001

                                                                                        2002

                                                                                                2003

                                                                                                         2004

                                                                                                                 2005

                                                                                                                          2006

                                                                                                                                  2007

                                                                                                                                           2008

                                                                                                                                                  2009

                                                                                                                                                         2010
        their overall research activities.
                                                       Source: Statistics Canada, Estimates of Canadian Research and Development Expenditures
                                                       and AUCC estimates using Statistics Canada data
        A number of factors will influence
        progress toward the doubling
        target. First, if the rate of                                          National innovation targets
        inflation for research grows more quickly than
        anticipated, total investments could double                            Universities’ ability to meet the collective
        without a resultant doubling of the research                           targets they have set will depend on the
        activity. Second, given the catalytic nature                           federal government’s ongoing commitment
        of their programs and activities, the rate of                          to pursue the national innovation targets
        growth in federal support will likely affect other                     first announced in the 2001 Speech from the
        sectors’ investments in university research.                           Throne and reiterated at the launch of the
        Finally, as additional research performance                            Innovation Strategy in 2002. At that time, the
        depends heavily on the presence of a growing                           federal government acknowledged Canadian
        number of university faculty and graduate                              productivity and competitiveness in a global
        students, universities’ ability to attract and                         knowledge economy depended on significant
        retain researchers will have a significant                             growth in R&D investments by all major
        impact on achieving the target. All of these                           research performers. With this in mind, the
        contextual factors will need to be monitored                           federal government affirmed the overarching
        to assess progress towards the target.                                 goal of having Canada rank among the top
                                                                               five performers of R&D by 2010 and made
                                                                               the commitment to at least double federal
                                                                               investments in R&D by this same date.

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Top five by 2010
One of the key ways to measure
                                                  National R&D targets (GERD to GDP)
a country’s research intensity is
its gross expenditures on R&D                        Country/region                 Target                Current GERD to GDP
expressed as a percentage of gross
domestic product. This measure                       Austria               2.5 % by 2006                  2.19 % in 2003
is widely accepted and used to
                                                     France                3 % by 2010                    2.26 % in 2002
make international comparisons
of national R&D trends and to                        Germany               3 % by 2010                    2.5 % in 2003
set national innovation targets.                     Korea                 Double national R&D            2.64 % in 2003
In the last three years alone, in                                          investments between
addition to Canada, a number                                               2003 and 2007
of countries and the European
                                                     United Kingdom        2.5 % by 2014                  1.87 % in 2003
Union have used this measure to
define national R&D objectives.                      European Union        3 % by 2010                    1.86 % in 2002

In the first few years after federal   Source: OECD, OECD Science, Technology and Industry Outlook and OECD, Main Science and Technology Indicators
reinvestment in research began,
Canada’s GERD to GDP                                       Given that other countries are setting
ratio increased from 1.66 percent in 1997                  ambitious GERD to GDP targets and stepping
to a high of 2.05 percent in 2001.47 This                  up their investments, AUCC estimates that
increase moved Canada from 15th to 13th place              Canada needs to invest at least three percent
among OECD nations, yet the country still                  of its GDP in R&D by 2010 to dramatically
lagged behind the OECD average of 2.28                     improve its relative position and compete for
percent. That same year, the U.S. ranked                   a top 10 ranking. To achieve a three percent
fifth with a GERD to GDP ratio of 2.73                     ratio, Canada’s overall R&D investments
percent, while the world leaders – Sweden,                 would need to increase to approximately
Finland, Japan and Iceland – all had GERD                  $50 billion by 2010, which is more than
to GDP ratios above three percent.                         double the 2004 level of $24.5 billion.
Despite continued federal investments in R&D
since 2002, Canada’s GERD to GDP ratio has                            Doubling of federal investments
fallen each year to reach a low of 1.89 percent                       in R& D by 2010
in 2004. While no comparative data is available
systematically, Canada has likely slipped back                        In order to help Canada rank in the top five
to its initial ranking in 15th place. A downturn                      performers of R&D by 2010, the federal
in the R&D investments of the domestic                                government committed to double its own
private sector and foreign investors, combined                        research investments by 2010. In 2000, the
with sustained investments by key competitor                          base year chosen by the federal government
countries, are largely responsible for Canada’s                       for its doubling target, federal investments in
inability to improve its ranking in recent years.                     R&D totaled $3.6 billion, or 17 percent of
A number of leading and emerging countries                            overall R&D spending in Canada. Doubling
have also significantly bolstered their R&D                           such an investment by 2010 would require
investments, which raises the bar even higher                         an annual average increase of 7.2 percent
for Canada to rank within the top five by 2010.                       between 2000 and 2010, to reach $7.2 billion



                 A s s o c i at i o n o f Un ive r s it i e s a n d Co l l e g e s o f C a n a d a                                               
                                                               m o m e n t u m




        Canada needs to continue to invest in R&D because
        other countries are not standing still
                             GERD AS PERCENTAGE OF GDP, 1997 AND MOST RECENT YEAR AVAILABLE

                  SWEDEN
                  FINLAND
                    JAPAN
                  ICELAND
                    KOREA
           UNITED STATES
            SWITZERLAND
                DENMARK
                GERMANY
                  BELGIUM
                   FRANCE
                  AUSTRIA                                                                                     MOST RECENT*
                  CANADA
           NETHERLANDS
                                                                                                              1997
        UNITED KINGDOM
                                                                                                              * 2000 to 2004
              TOTAL OECD

                          0.0            0.5             1.0       1.5   2.0       2.5        3.0       3.5          4.0       4.5
        Source: OECD, Main Science and Technology Indicators



        by the target year of 2010. In 2004, the                         over the period rather than double, for
        federal government invested an estimated                         Canada to make major progress toward the
        $4.7 billion in R&D, which puts it on track to                   national objective of ranking among the
        achieve a doubling of its R&D investments                        top five performers of research by 2010.
        by 2010. To reach the target, overall federal                    Federal investments, and more specifically in
        investments will need to grow an additional                      university R&D, have a significant leveraging
        53 percent over the next six years.48                            capacity, stimulating other sectors to invest
                                                                         in research. Federal investments catalyze
        The doubling of federal government                               both additional funding from other sectors
        investments in R&D by 2010 represents a                          and cross-sectoral partnerships where risk
        significant commitment toward the national                       is shared among more funders. As such,
        goal of sustaining and enhancing Canada’s                        federal investments in research will be an
        overall R&D performance. However, these                          important indicator of this country’s ability
        investments would likely need to triple                          to reach its national innovation targets.


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Conclusion

Federal investments in university research
since 1997 have made possible the
significant improvements to Canada’s
research capacity that will fuel the country’s
continuing international competitiveness,
economic prosperity and quality of life. The
investments to date have shaped a number
of important interrelated dimensions of
the research enterprise. New resources have
helped increase the number of researchers
and the quality of research infrastructure,
encouraging increased collaboration both
within Canada and internationally.

Together, these mutually reinforcing
investments have helped make Canadian
universities far more attractive places to do
research than was the case a decade ago. A
number of measures have been introduced
to document universities’ progress with
respect to innovation, including a target
of doubling the research performed, and
tripling commercialization performance,
thereby strengthening their capacity to
transfer knowledge to society through a
number of mechanisms. This increasingly
productive and hospitable environment
for knowledge creation makes it far likelier
that progressively more of the fruits of
university research can be transferred into
the economic, social and cultural fabric of
the country to the benefit of all Canadians.




              A s s o c i at i o n o f Un ive r s it i e s a n d Co l l e g e s o f C a n a d a   5
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        Notes to Chapter Two


        1 The Government of Canada documented                       16 National Advisory Board on Science
           an investment of $13 billion in basic research              and Technology, Healthy, Wealthy and
           between 1997-98 and 2003-04. AUCC has                       Wise: A Framework for an Integrated Federal
           estimated these investments until 2004-05.                  Science and Technology Strategy (1995).
        2 Government of Canada, Speech from the                     17 Department of Finance Canada, Accountability
           Throne 2004 and Department of Finance                       of Foundations: Backgrounder (2005).
           Canada, Budget Plan 2004 (Ottawa, 2004).                    From Department of Finance Web site
        3 Association of Universities and Colleges of                  (www.fin.gc.ca/toce/2005/accfound-e.html).
           Canada, Trends in Higher Education (2002).               18 All figures in this paragraph are from
        4 AUCC calculations based on data from                         the Canada Foundation for Innovation
           Statistics Canada, Financial Information                    Web site (www.innovation.ca).
           of Universities and Colleges Survey.                     19 There are no exact figures on the number of
        5 Some examples of media headlines relating to                 third generation synchrotrons as there is no
           this issue include: a) “For Canadians, U.S. land            consensus on the definition of a third generation
           of opportunity”, Ottawa Citizen, December 10,               synchrotron. According to the Canadian
           1997; b) “Losing our brains U.S. ‘poachers’                 Light Source, there are between 8 and 17.
           luring away our skilled workers, researcher says”,       20 From the Canadian Light Source
           The Toronto Star, October 31, 1996; c) “Brain               Web site (www.lightsource.ca).
           drain hampers Canada’s competitiveness, say              21 Canada Foundation for Innovation, Progress
           executives”, National Post, November 25, 1999.              Report of CFI-Funded Projects 2003-04 (2004).
        6 AUCC calculations based on data                           22 Ibid. Canada Foundation for Innovation
           from Statistics Canada.                                     defines trainees as students from all levels.
        7 From Canada Research Chairs Program                          More than 24,000 of these trainees were
           Web site (www.chairs.gc.ca).                                graduate students and the remaining 5,000
        8 New applicants are tracked differently by the                were at the undergraduate level.
           three federal research granting agencies. NSERC          23 Ibid.
           collects data on new applicants, SSHRC on                24 For more information on ACCT, please
           new scholars and CIHR on new projects.                      visit the Web site (www.acctcanada.ca).
        9 AUCC calculations based on data                           25 AUCC calculations based on data from OECD
           from Statistics Canada.                                     Main Science and Technology Indicators.
        10 Ibid.                                                    26 Statistics Canada, Estimates of Canadian
        11 Statistics Canada, Census data.                             Research and Development Expenditures.
        12 AUCC calculations based on data from                     27 AUCC calculations based on data from the
           Statistics Canada, Labour Force Survey.                     Networks of Centres of Excellence.
        13 Ibid.                                                    28 Vincent L., Gingras, Y., Archambault, É.,
        14 Bearing Point, Evaluation of the Innovation                 Comparative Analysis of Networks of Collaboration
           Fund, University Research Development Fund, and             of Canadian Researchers in the Natural Sciences,
           College Research Development Fund (2003).                   Social Sciences and the Humanities (2005).
        15 Association of Universities and Colleges                 29 Ibid.
           of Canada et al., Putting Knowledge to Work:             30 AUCC, internal database.
           Sustaining Canada as an Innovative Society (Brief        31 AUCC estimates.
           presented to the Federal Government, 1996).




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32 Thomson Scientific, ISI Essential
   Science Indicators (2005). Based on data
   collected between 2000 and 2004.
33 Ibid. Based on data collected
   between 1994 and 2004.
34 Ibid.
35 Ibid. Based on data collected
   between 2000 and 2004.
36 McDonald, A., SNO Collaboration’s Mass
   Success in Science Watch (Vol. 15:1, 2004).
37 King, D., The Scientific Impact of Nations
   in Nature (Vol. 430, 2004).
38 National Institutes of Health, Extramural
   Data and Awards Trends.
39 Association of Universities and Colleges of
   Canada, A Strong Foundation for Innovation: An
   AUCC Action Plan (2002). From AUCC Web site
   (www.aucc.ca/_pdf/english/reports/2002/
   innovation/innoactionpl_e.pdf).
40 For information on the Survey, please visit the
   Statistics Canada Web site (www.statcan.ca).
41 Should equity held represent a significant portion
   of universities’ commercialization success in 2010, it
   would likely be reported in the final measurement as
   a contextual variable that is complementary, albeit
   separate, from the total income measurement.
42 Statistics Canada, special tabulation.
43 Ibid.
44 Statistics Canada, Survey of Intellectual
   Property Commercialization in the Higher
   Education Sector, 2001 (2003).
45 AUCC estimates using data from Statistics Canada.
46 Ibid.
47 All GERD to GDP figures in this section are
   from OECD Main Science and Technology
   Indicators except for Canada where it is AUCC
   calculations using Statistics Canada data.
48 Figures in this paragraph are from
   Statistics Canada or AUCC estimates
   based on data from Statistics Canada.




                A s s o c i at i o n o f Un ive r s it i e s a n d Co l l e g e s o f C a n a d a   

				
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