Imagine your company wants to establish a new research and development facility. Where would you go? Would you set up shop in the United States, which conducted $368 billion of R&D in 2007? How about Finland, where more than 15 out of every 1,000 workers are R&D researchers?
Would you choose Canada? Here are three reasons you should.
1. Public spending: Although Canadian private sector R&D spending as a percentage of GDP is comparatively low, federal and provincial government investments in R&D are quite robust. In 2006, the federal government provided 18 per cent of all R&D funding, $5.2 billion.
2. Tax incentives: According to KPMG, Canada offers the most competitive R&D tax incentives in the G7 (and the second most competitive globally). At the federal level, companies can take advantage of programs like the Scientific Research and Experimental Development (SR&ED) tax incentive program, a series of tax credits supporting basic and applied research expenditures in science and technology. Provincial programs like Ontario’s Ontario Business Research Institute Tax Credit (OBRITC) offer additional sweeteners.
3. Competitive costs: In 2006, KPMG found that Canada had a 5.5 per cent cost advantage over the US for R&D. The loonie’s wild ride and huge gains against the US dollar eroded that advantage in KPMG’s 2008 analysis, but as the exchange rate stabilizes below par, Canada’s cost advantage should rebound, helped along by competitive healthcare, education and and other quality of life factors.

Kathryn provides market intelligence services to MaRS Advisory Services clients and to The Innovations Group at the University of Toronto. She is a graduate of the University of Toronto's Faculty of Information.