Research and development is not just about gadgets and laboratories – it’s about sovereignty, resilience and economic power.Cole Burston/Getty Images
Mehrdad Hariri is the CEO and president of the Canadian Science Policy Centre.
Canada is finally catching up to its NATO commitments, pledging to raise defence spending to 2 per cent of GDP this year, and to increase it to 5 per cent by 2035. This increase in defence spending is a major strategic policy shift and must be evaluated not just in terms of military procurement, but also by how it grows the Canadian economy and builds a foundation for long-term security and economic prosperity. That means earmarking at least 20 per cent of the defence budget for research and development (R&D), a bold yet necessary step that could reposition Canada as a serious player not only in defence, but in innovation.
For decades, Canada has underperformed when it comes to investing in R&D. We currently spend just 1.7 per cent of our GDP on R&D, far below the OECD average of 2.7 per cent, and lagging significantly behind nations like the United States (3.6 per cent ), Germany (3.1 per cent) and South Korea (5.2 per cent). This shortfall has broad consequences: weak innovation and productivity growth, poor commercialization of scientific research, and missed economic opportunities in global innovation sectors.
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Compare this to the United States, which devotes more than 15 per cent of its defence budget – more than US$150-billion annually – funding breakthrough research and innovations through various departments and other entities like the Defense Advanced Research Projects Agency (DARPA). This funding supports a wide range of areas, including cybersecurity, AI, robotics and even biomedical research into diseases such as cancer. Germany spends close to 20 per cent of its defence budget on R&D; France and Great Britain also invest heavily as part of broader industrial and strategic policies. But here in Canada, we’ve treated research as a luxury rather than a necessity. That has to change.
Research and development is not just about gadgets and laboratories – it’s about sovereignty, resilience and economic power. The technologies that define modern defence, such as cyber operations, space surveillance, drone systems, quantum communications and biosecurity, are also the ones that shape the broader economy.
By investing in R&D, Canada can build domestic capabilities that benefit both our armed forces and civilian industries. Imagine Canadian-made AI systems that defend against cyber threats while also optimizing logistics in health care. Or next-generation materials designed for Arctic defence that also power clean-energy innovation.
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And let’s not forget jobs. R&D-intensive sectors create high-paying, high-skilled employment. They attract talent, foster startup ecosystems and generate exportable intellectual property. If we’re going to increase military spending by tens of billions of dollars over the next decade, let’s ensure that it’s boosting our economy and strengthening innovation.
The U.S. model offers a powerful blueprint. Agencies like DARPA fund ambitious, high-risk/high-reward projects that often lead to revolutionary advances. Much of what powers today’s tech economy, from GPS to the internet, originated in R&D labs funded by the defence budget. Whatever is identified as a priority under the defence budget, such as cancer research in the U.S., can be funded.
We don’t need to replicate the U.S. system wholesale, but we do need a made-in-Canada approach with similar ambition. That means building institutional capacity to manage innovation, strengthening partnerships between the military, universities and private sector, and setting aside a meaningful portion – at least 20 per cent – of the defence budget specifically for R&D.
Some will argue that defence money should go straight to operations or equipment. But without investing in the innovation pipeline, we’ll just end up buying someone else’s solutions at a premium, and witness the further weakening of our industrial base. Worse, we’ll lack the domestic expertise to adapt when threats evolve. In an age of cyber warfare, autonomous weapons and space militarization, a technological edge and strong innovation ecosystem is everything. Falling behind is not just a risk, it’s a vulnerability.
This government has said it will build a stronger Canada by investing more in our future – the Speech from the Throne promised “to build Canada into the world’s leading hub for science and innovation.” We have a rare opportunity to change Canada’s status, to raise us from the bottom of the OECD rankings to become a serious player in defence, science and innovation. This is Canada’s moment to seize.