Ottawa, September 27, 2012

Canada’s sliding global competitiveness ranking is due to its weak innovation performance, according to a Conference Board of Canada analysis of World Economic Forum’s Global Competitiveness Index 2012-13.

Overall, Canada’s ranking declined to 14th place in 2012 – from 12th place in 2011 and 10th place in 2010. But in the sub-area of innovation and business sophistication factors, Canada fell six places from 15th to 21st – no other top-ranked country dropped nearly as much.

The publication Who Dimmed the Lights? Canada’s Declining Global Competitiveness Ranking, for the Conference Board’s Centre for Business Innovation, argues that Canada needs to take advantage of its basic strengths, leverage its abundance of natural resources and skilled workers, and produce value-added products and services for domestic and international markets.

“Canada’s declining overall ranking is indicative of the country’s competitiveness malaise,” said Douglas Watt, Director, Organizational Effectiveness and Learning. “This decline raises concerns about the country’s ability to leverage its relatively strong socio-economic footings for competitive advantage. Some of our top competitors are increasing their competitiveness, so Canada must improve just to keep pace. If we don’t do something, Canada’s future prosperity is in jeopardy.

“Fourteenth place out of 144 countries is good—but ‘good’ really isn’t good enough anymore. Future national competitiveness—the underpinning of social and economic prosperity—requires that our competitive advantage shift to the production of more value-added goods and services. The key is to pursue new opportunities and enter new markets in order to move away from being excavators of minerals, hewers of wood, movers of bitumen, and wardens of water.”

This Conference Board briefing provides a Canadian business perspective on the findings of The Global Competitiveness Report 2012–2013, the 34rd edition of the World Economic Forum’s report. The Conference Board of Canada is the Canadian Partner Institute at the World Economic Forum’s Centre for Global Competitiveness and Performance.

The Global Competitiveness Index consists of three sub-indexes that capture the core elements of a country’s competitiveness, including:

• Basic requirements (e.g., institutions, infrastructure, and macroeconomic environment): Canada ranks 14th, a decline of one position.
• Efficiency enhancers (e.g., higher education and training, labour market efficiencies, technological readiness, market size): Canada ranks a respectable sixth.
• Innovation and business sophistication factors (e.g., nature of competitive advantage, capacity to innovate): Canada falls six places, from 15th to 21st.

Canada has strong fundamentals when it comes to supporting productivity, business performance, and competitiveness. Our population is healthy, our education system is solid, and our institutions and infrastructure are, for the most part, a boon to the country’s economic strengths and competitive potential.

However, Canada’s year-over-year decline (from 11th in 2011 to 22nd in 2012) was particularly significant in indicators of innovation performance—such as university–industry collaboration in R&D, quality of scientific research institutions, capacity for innovation, company spending on R&D, and government procurement of advanced technology products.

This decline is especially disappointing given that Canada is an advanced economy and at a stage of development where its future prosperity rests mostly on its capacity to innovate. The gap between Canada’s inability to leverage its economic and structural strengths for value-added performance and competitive advantage is one of the greatest roadblocks to improved competitiveness and future prosperity.

Switzerland, Singapore, and Finland are the top three countries in the World Economic Forum’s 2012-2013 rankings. Each of the top three economies performs well across all three competitiveness sub-indexes (basic requirements, efficiency enhancers, and innovation and business sophistication).