Research and development expenditure

R&D expenditure is anticipated to stagnate over the five years to 2023, primarily driven by a decline of 5.1% in 2021. The second largest decline occurred in 2015, when R&D expenditure fell 3.0%. Additionally, the value of expenditures fell in 2013 as additional funding from the 2009 Economic action plan (e.g. Knowledge Infrastructure Program) was completed. Much of the decline in spending exhibited in 2015 can be attributed to commodity prices declines, and the negative effects they had on corporate profitability. According to Statistics Canada, nearly half of the R&D spending in Canada is derived from industrial companies. Therefore, reduced spending by energy companies is expected to have dragged on overall spending. Research and development expenditure stagnated in 2020, as diminished corporate profit levels and pandemic uncertainty forced many businesses to allocate capital reserves toward debt obligations and payroll. Despite a reopening economy in the latter half of 2020, R&D expenditure was reduced in 2021 as businesses outsourced R&D due to volatile corporate profits in 2020. Rich corporate profit growth in 2021 is anticipated to spur investment in innovation, and recovery in the domestic labor market will provide the human capital necessary to expand research and development in 2022. Growth was projected to persist among accommodative lending practices, however, inflation and rising interest rates forced businesses to reduce additional R&D spending in 2022 and 2023 to keep core operations active. After the Bank of Canada began implementing interest rate cuts during 2024, investment in Research and Development once grew once again. As budgets across the Canadian economy benefit from reduced rates, R&D expenditures have risen during 2025.