--- canonical_url: "https://csls.ca/research/rd-spillovers-in-canadian-industry-results-from-a-new-micro-database/" title: "R&D Spillovers in Canadian Industry: Results from a New Micro Database" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-02T11:34:04+00:00" date_modified: "2026-07-07T07:34:23+00:00" post_type: "research" summary: "" post_tag: - "Canada" - "innovation" - "micro database" - "R&D spillovers" - "research and development" - "small firms" - "SR&ED" - "subsidy policy" country_focus: - "Canada" province_region: - "National" research_theme: - "Productivity and Economic Measurement" - "Technology and Innovation" featured_image: "https://csls.ca/wp-content/uploads/2026/07/old-reports_hero_banner_bg.webp" status: "publish" --- # R&D Spillovers in Canadian Industry: Results from a New Micro Database Canonical URL: https://csls.ca/research/rd-spillovers-in-canadian-industry-results-from-a-new-micro-database/ # R&D Spillovers in Canadian Industry: Results from a New Micro Database [Download full PDF report](https://csls.ca/pdf/csls2019-02-1.pdf) Cite this report × Cite this report as: Kim, Myeongwan, and John Lester. 2019. “R&D Spillovers in Canadian Industry: Results from a New Micro Database.” CSLS Research Report 2019-02. Ottawa: Centre for the Study of Living Standards. https://csls.ca/research/rd-spillovers-in-canadian-industry-results-from-a-new-micro-database/ ## Authors: - Myeongwan Kim Centre for the Study of Living Standards (CSLS) - John Lester Centre for the Study of Living Standards (CSLS) ## Report 2019-02 August 2019 57 pages ## Related research [Measuring the Appropriate Outcomes for Better Decision-Making: A Framework to Guide the Analysis of Health Policy Matthew Calver March 2016 | Report 2016-03 | 132 pages](https://csls.ca/research/measuring-the-appropriate-outcomes-for-better-decision-making-a-framework-to-guide-the-analysis-of-health-policy-2016-03/) [Living Standards Domain of the Canadian Index of Wellbeing Andrew Sharpe, Christopher Ross November 2011 | Report 2011-17 | 124 pages](https://csls.ca/research/living-standards-domain-of-the-canadian-index-of-wellbeing-2011-17/) [Productivity: Key to Economic Success Centre for the Study of Living Standards (CSLS) March 1998 | Report 1998-01 | 99 pages](https://csls.ca/research/productivity-key-to-economic-success/) [Apprenticeship in Canada: A Training System Under Siege? 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Firms undertaking the R&D can reduce production costs and introduce new products that provide benefits to consumers that are not fully captured in selling prices. Further, it is very difficult for R&D-performing firms to prevent some of the knowledge created from leaking out or spilling over to other firms. Since firms do not take these positive spillover benefits into consideration when making investment decisions, most governments subsidize business investment in R&D with the expectation that economic performance will improve as a result. Our study confirms the existence of substantial spillover benefits from R&D performed in Canada, so government support for R&D is justified. However, we do not find any empirical evidence to support the current policy of subsidizing R&D at a higher rate when it is performed by small firms than when it is performed by large firms. We also find much lower private rate of return on R&D performed by small firms than by large firms. Subsidies appear to be playing a key role in this result. L’investissement des entreprises en recherche et développement (R-D) contribue de façon déterminante à la hausse du niveau de vie. Les entreprises qui réalisent de la R-D peuvent réduire leurs coûts de production et introduire de nouveaux produits qui procurent aux consommateurs des avantages non entièrement reflétés dans les prix de vente. De plus, il est très difficile pour les entreprises qui font de la R-D d’empêcher qu’une partie des connaissances créées ne se diffuse vers d’autres entreprises. Comme les entreprises ne tiennent pas compte de ces retombées positives dans leurs décisions d’investissement, la plupart des gouvernements subventionnent l’investissement des entreprises en R-D, dans l’espoir que la performance économique s’en trouvera améliorée. Notre étude confirme l’existence de retombées substantielles découlant de la R-D effectuée au Canada, ce qui justifie le soutien gouvernemental à la R-D. Cependant, nous ne trouvons aucune preuve empirique appuyant la politique actuelle consistant à subventionner la R-D à un taux plus élevé lorsqu’elle est réalisée par de petites entreprises que lorsqu’elle est réalisée par de grandes entreprises. Nous constatons également un rendement privé de la R-D nettement plus faible pour les petites entreprises que pour les grandes entreprises. Les subventions semblent jouer un rôle clé dans ce résultat. [Download full PDF report](https://csls.ca/pdf/csls2019-02-1.pdf)