Without more support for industry investment in research and development, Canada will be hard-pressed to keep up with international competitors and will risk an erosion of its economic well-being, a benchmark report on the state of the nation's science and technology landscape has revealed.

The report is the latest in a series of biennial reviews from the Science, Technology and Innovation Council, an 18-member panel that the Harper government created in 2007 to replace a range of science policy advisers and bodies. Its findings indicate that Canada has dropped in rank from 16th to 23rd in overall expenditures on research and development relative to GDP compared to other economically developed countries.

Among the indicators where Canada is falling behind or could do better, the report identifies the number of doctorates awarded in science and technology relative to the total population, the fraction of Canadians working in science and technology, support for research in academic institutions, R&D investment by the private sector and spending on information and communication technology in support of innovation.

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"We continue to face challenges as an innovation nation," said Howard Alper, a professor of chemistry at the University of Ottawa who chairs the council. "This has to change if we are to compete well internationally and secure a strong future."

The report's release on Tuesday coincided with another briefing in Ottawa in which Gary Goodyear, the Minister of State for Science and Technology, announced the awarding of $413-million for basic science through the National Science and Engineering Research Council. The announcement does not represent new money but rather the allocation of funding already in NSERC's budget.

With the government facing criticism in recent weeks that it has skewed Canada's research priorities too far in the direction of applied research with short-term commercial goals, Mr. Goodyear insisted that federal support for basic research is strong.

"It's not one or the other," he said. "It is a continuum that includes the full spectrum of activity from basic research to innovation and through to the commercialization of those discoveries."

James Turk, executive director of the Canadian Association of University Teachers, agrees that Canada needs a balanced approach to funding science across the spectrum, but says funding for basic, blue-sky research in real dollars is down and the government's announcement doesn't change that.

"It's trying to give the appearance of something without the reality," Mr. Turk said of the funding announcement.

Mr. Goodyear said that the STIC report showed the government was "on the right track" in its efforts to push for a stronger relationship between academic research and industry, including refocusing the work of the National Research Council to aide business with problem-specific research.

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The report recommends more emphasis on direct government support for industry-driven research instead of indirect support in the form of tax credits. It also stressed how competing nations typically have a more integrated framework in which government, universities and industry work together to maximize returns on investment in science and technology.

Paul Dufour, an adjunct professor with the University of Ottawa's Institute for Science, Society and Policy, said it is not clear what elements of the report – if any – the federal government will take up in earnest. He noted the government has not reported on or revised its own stated science and technology policy since 2009, and added, "I think it would help the debate in this country and move the agenda forward" if it did so.