Poor innovation dims Canada's competitiveness and prosperity

Must leverage natural resources, skilled workers: Report
|hrreporter.com|Last Updated: 10/03/2012

Canada's sliding global competitiveness ranking is due to its weak innovation performance, according to a Conference Board of Canada analysis of the 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 as much, said the Conference Board.

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, according to Who Dimmed the Lights? Canada's Declining Global Competitiveness Ranking.

"Canada's declining overall ranking is indicative of the country's competitiveness malaise," said Douglas Watt, director of organizational effectiveness and learning at the Conference Board of Canada. "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."

The Global Competitiveness Index has three sub-indexes that look at the core elements of a country's competitiveness:

•Basic requirements (such as institutions, infrastructure and macroeconomic environment): Canada ranked 14th, a decline of one position.

•Efficiency enhancers (such as higher education and training, labour market efficiencies, technological readiness, market size): Canada ranked sixth.

•Innovation and business sophistication factors (such as the nature of competitive advantage, capacity to innovate): Canada fell from 15th to 21st.

Canada has strong fundamentals when it comes to supporting productivity, business performance and competitiveness, said the Conference Board, with a healthy population, solid education and institutions and infrastructure that, for the most part, are 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,” said the report.

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

The report can be found at Conference Board.

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