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by Manuel Trajtenberg, Tel-Aviv University, National Bureau of Economic Research and Canadian Institute for Advanced Research, January 2000
Canada has been lagging in terms of productivity growth in recent years. A possible cause might be poor performance in R&D and technical change. This paper is an attempt to shed light on this issue, by examining innovation in Canada over the past 30 years with the aid of highly detailed patent data. For that purpose, the author uses all Canadian patents taken in the United States (over 45 000), as well as U.S. patents and patents from other countries for comparative purposes. Canadian patenting is highly correlated with lagged R&D, and with worldwide developments in technology as reflected in total U.S. patenting. Canada stands mid-way among the G7 countries in terms of patents per capita and patents/R&D, but in recent years it has been overtaken by a group of "high tech" countries: Finland, Israel and Taiwan, with South Korea closing-in fast. The technological composition of Canadian innovations is rather out of step with the rest of the world, with the share of traditional fields still very high in Canada, whereas the upcoming field of computers and communications has grown less in Canada than elsewhere. Given that the computers and communications group is the dominant "general purpose technology" of the present era, weakness in this area may impinge on the performance of the whole economy. Another source of weakness lies in the pattern of ownership of the intellectual property represented by patents: less than 50 percent of Canadian patents are owned by Canadian corporations, a much lower percentage than all other G7 countries. In terms of the relative "quality" of Canadian innovations, as measured by the number of citations received, it is significantly lower than the quality of patents awarded to U.S. inventors, particularly in computers (but not in communications), and in medical instrumentation (but not in drugs).