The Organisation for Economic Co-operation and Development (OECD) has released the results of their Canadian Economic Surveys. The results revealed that strong profits in the mining and oil sectors have supported business investment , while the latest indicators suggest that the economy is picking up. The outlook calls for continued moderate output growth and inflation in 2012-2013.
While Canada’s academic research is world class, the productivity growth due to research and development has not been significant. The OECD suggests that government support to R&D should focus more on raising the performance of incentive programs such as SR&ED. The OECD supports the government’s changes to R&D in the 2012 budget, which included the reduction of the SR&ED program in exchange for the $400-million Venture Capital (VC) fund, and more money for the grant-based Industrial Research Assistance Program (IRAP) — but cautioned it against “picking winners”. It has also been recommended that the higher tax subsidy rate for small domestic firms should be unified at the lower large firm rate to encourage firms to attain the economy of scales needed for innovation.
