Canada is stagnating when it comes to competing on the world stage and a lack of innovation is holding us back, according to a new report by the World Economic Forum.
For the second year in a row, Canada ranked 14 out of 148 countries measured in the Forum’s Global Competitiveness Report.
Since 2009, Canada has fallen five places in the rankings.
And when it comes to innovation, Canada is doing even worse. The country ranked 25 for “innovation and sophistication factors,” a drop of four places.
“When it comes to business innovation, Canada is seriously underperforming,” said Michael Bloom, vice-president organizational effectiveness and learning at the Conference Board of Canada, the WEF’s partner institute in the country. “Canada actually fell four places in factors related to innovation and business sophistication, and that's a real concern."
While Canada ranked highly for its efficient markets, particularly labour, and the health and primary education systems, with both ranking in the top 10, Canada’s post-secondary and training systems aren’t performing as well, coming in at 16.
“The top two most problematic factors for doing business in Canada are now innovation-related - access to financing, and insufficient capacity to innovate,” according to the Conference Board.
While most businesses in Canada self-identify as “innovative,” according to a companion report prepared by the Board, Financing Innovation by Established Businesses in Canada, they aren’t doing enough.
According to that report, Canada continues to struggle with commercialization and funding for research and development.
“Canadian-based businesses would need to more than double their annual spending on R&D to US$35 billion for Canada to equal the business R&D intensity of the United States,” the report says.
The Conference Board also found that only 25 companies account for almost half of all business R&D spending in the country.
But The Conference Board did find that by using broader measures – looking at the amount of time companies devoted innovation – rather than just R&D spending, Canada does look better.
But money is still the biggest problem.
“By far, the most prevalent challenge to innovation in Canadian industry is the lack of funding, especially for SME companies. For large companies, the corporate culture and the fear of risk take precedence as major challenges to innovation,” according to another companion report, The State of Firm-Level Innovation in Canada.
For their part, the WEF says Canada should to improve “its innovation ecosystem” through “increased company-level spending on R&D and government procurement of advanced research products.”
Overall, Switzerland was ranked first in competitiveness, with Singapore, Finland, Germany and the United States rounding out the top five.
Image: Roger Cullman via Flickr