Businesses in Canada planned to spend $15.6 billion on industrial research and development in 2011. That is five per cent higher than the $14.9 billion they planned to spend in 2010. iStock

Research and development spending by industry is expected to increase in 2011 — the first time in four years that has happened in Canada.

"The 2011 industrial R&D spending intentions suggest that recovery is underway after three consecutive years of declining R&D spending that occurred across almost all industrial sectors," said a Statistics Canada report Friday.

Businesses in Canada planned to spend $15.6 billion on industrial research and development in 2011. That is five per cent higher than the $14.9 billion they had planned to spend in 2010, but still below the $16.8 billion they spent in 2007.

The communications sector showed the biggest relative increase, at 21.4 per cent, followed by aerospace at 8.2 per cent.

Each of those industries planned to spend $1.4 billion this year. Scientific research and development services planned to spend the largest amount, at $1.7 billion, but that was an increase of 1.1 per cent compared to 2010.

In addition to planned spending in recent years, the Statistics Canada report also looked at actual spending for years where data was available.

It found that industrial R & D activities provided the equivalent of 149,900 full-time jobs across the country in 2009, down 11.8 per cent from 2008.

The companies themselves provided 79 per cent of the funding for their research and development activities. However, 13 per cent came from foreign sources, two per cent came from the federal government, and the rest came from other Canadian sources such as provincial governments and contracts with other firms.

Over the longer term, the number of companies performing research and development has increased from 9,648 in 1997 to 24,203 in 2008.

Nevertheless, Canada's R & D spending-to-GDP ratio "continues to lag the average for all OECD member countries" and fell from 1.3 in 2001 to 1.0 in 2009, the same level it was in 1994, the report said. Meanwhile, the U.S. ratio increased to 2.0 in 2008 from 1.7 in 1994.

The countries with the highest relative R & D spending were Israel and Finland, which had ratios of 3.4 and 2.8 respectively. In 2009, the most recent year for which provincial data was available, Ontario and Quebec accounted for more than 75 per cent of industrial R & D spending across the country.