Canada has been able to attract foreign investment in research and development. Its share of investment in R&D by foreign companies has been the highest in the OECD countries every year since 1997.9 Canada has lower R&D costs than the United States, as well as one of the most attractive R&D tax credit systems. However, India has become a major player in software development. It is attracting some R&D in information technology from North America due to its large number of computer engineers with much lower compensation. China with its large pool of scientists and engineers may become a more attractive place for foreign direct investment in R&D. However, China is currently constrained in this area by its poor intellectual property rights regime and legal framework. Having joined the World Trade Organization, China is under immense pressure to make its practices conform with its commitments in areas such as trade-related aspects of intellectual property rights. If it can improve in these areas, it could become a formidable player in global R&D investments.
For Canada to compete successfully for foreign R&D investment, it will need to increase its supply of engineers, scientists and technicians. Its capacity to carry out substantially more R&D is limited by the availability of qualified professionals in these areas. It will also need to specialize in certain R&D activities and be the best internationally in these areas.
| Needed are productivity improvements and a larger pool of highly qualified personnel. |