Welcome | Board of Directors | Links | Contact Us
Program Guidelines and Application Forms
Annual Reports | Letter From the Chair

The R&D Opportunity

Introduction | R&D Linked to Economic Success | Ontario's R&D Strengths | Taking Action: A New Approach to R&D and Innovation | Ontario's Current R & D Tax Incentives | New Tax Initiatives to Support R & D and Innovation |
The R&D Challenge Fund | Ontario's Investment | New! Budget 98 Update |

Ontario: Challenge Fund
Introduction

From the 1997 Budget: Innovation, Economic Growth and Job Creation

This paper is about jobs - creating new and better jobs in the future and ensuring that the province keeps the jobs it now has. Successful private-sector companies are the engine of job creation in the Ontario economy. The Government's plan is to create a positive business climate to unleash the power of private-sector job creation - by cutting taxes, by investing taxpayers' money more wisely, and by removing barriers to private-sector growth.

The stakes are high. Innovative economies, like Ontario's, that provide fertile ground for knowledge-based companies to grow can look forward to good jobs and a high standard of living in the future. Those that are not up to the challenge will see high unemployment and a declining standard of living.

  • The job creation payoffs from innovation and research and development are substantial. During the last 10 years, two of every three new jobs in Ontario were created in knowledge and technology-based industries.

sample graph

Innovation is the key that unlocks the door to knowledge-based growth and job creation. Just as it is necessary to invest in people and in physical capital for the economy to grow and create jobs, so also is it necessary to invest in innovation. Research and development - R&D - is an investment in innovation, in economic growth and in job creation. In other words, R&D is an investment in Ontario's future.

The Province's plan - cut taxes, invest wisely, and rely on the private sector for job creation and economic growth - will work for R&D just as it is working in other areas. Supporting R&D through tax cuts is one important way of creating good, long-lasting jobs. Encouraging the province's leading companies, large and small, to partner with Ontario's finest universities is another effective way to build the knowledge that will enable our companies to compete on a world scale and create jobs.

The Government will contribute $500 million to an R&D Challenge Fund that will result in a total investment of $3 billion over 10 years. This investment will promote greater partnership and collaboration between the private sector and Ontario universities and support research excellence in our universities. In addition, the Government is introducing seven new tax cuts to support private-sector investment in R&D and innovation, including a new 20 per cent refundable tax credit for business-sponsored R&D performed by universities and other post-secondary educational institutions in Ontario. These new tax measures will help support a further $3 billion in private-sector investments over the next 10 years.

In total, these measures will help ensure that Ontario remains one of the most competitive jurisdictions in the world in which to perform R&D. Their purpose is to move the economic yardsticks ahead - to create jobs, increase productivity, and raise incomes.

R&D and Innovation Key to Job Creation and Growth

In the 21st century, the ability to create and apply commercially valuable knowledge will separate the economic leaders from the rest of the pack. Companies throughout the world's advanced economies know this and are seeking ways to use knowledge to create competitive advantages.

R&D is an investment in innovation - the development and application of new knowledge to produce new products and services and to find new, more productive ways of doing things. Innovation is the cornerstone on which a high-income, job-creating economy is built.

R&D influences job creation and economic growth in a variety of ways:

  • High R&D economies have a better chance to be in on the ground floor when new fast-growing industries that will be the job creation machines of the future are born.
  • Fast-growing, innovative companies, many of which invest heavily in R&D, create a disproportionate share of new jobs.
  • As new knowledge flows from one part of the economy to other parts, the productivity of capital and labour both rise. A general-purpose technology such as computing illustrates how new knowledge can ripple through the economy with profound effects on both what is produced and how it is produced.
  • Even knowledge that is protected by intellectual property rights can benefit other companies through "demonstration effects" where companies learn by observing the products and services offered by their competitors.
  • The skills and knowledge acquired through R&D diffuse through the economy as people change jobs and take their expertise with them.
  • R&D capabilities make companies more proficient in adopting and commercializing new technologies.
  • Success breeds success. Clusters of high-technology companies and institutions such as those in the Kitchener-Waterloo-Cambridge-Guelph Technology Triangle or the Ottawa area attract new investment and generate new "spin-off" companies.
  • R&D-intensive sectors generate approximately 22 per cent of the province's merchandise exports. If autos are excluded, the export share of R&D-intensive industries rises to close to 40 per cent.

All of this means that the economy-wide returns from R&D are much greater than the returns to any individual firm that performs R&D. Estimates of the total economic return to R&D typically range from 50 to more than 100 per cent.

Introduction | R&D Linked to Economic Success | Ontario's R&D Strengths | Taking Action: A New Approach to R&D and Innovation | Ontario's Current R & D Tax Incentives | New Tax Initiatives to Support R & D and Innovation |
The R&D Challenge Fund | Ontario's Investment | New! Budget 98 Update |


English


Welcome | Board of Directors | Links | Contact Us
Program Guidelines and Application Forms
Annual Reports | Letter From the Chair

Ontario Ministry of Enterprise, Opportunity and Innovation
Ministry of Enterprise, Opportunity and Innovation
 
Technical inquiries to: webmaster@competitor.net

© Copyright 1998 Queen's Printer for Ontario
Last Modified: October 25, 2002