The latest World Economic Forum rankings of global business competitiveness are out, and while Canada slid a notch overall, the results show enough clear signs of improvement to encourage Canadian policy-makers to continue – even double down on – initiatives aimed at bolstering innovation.
The headline result was discouraging. Canada now ranks 15th out of 144 countries for its business competitiveness, down from 14th last year and a high of ninth in 2009. The WEF’s annual review assesses 112 factors related to a country’s competitiveness, including financial-market efficiency, labour-market qualifications, technological readiness, innovation and business sophistication.
Canada’s slide has mostly been a story of other countries’ greater success, as they pass us in key measures having to do with productivity and technology. But there are signs of success within the data, especially in areas critical to future growth.
While small companies have long complained about the lack of available financing from loans or venture capital investment, Canada ranked fifth globally in 2014 for availability of financial services, up from ninth last year. It sat in 17th place in venture-capital availability, an improvement from 23rd place a year ago, thanks to a blossoming of new venture capital programs in the past two years. There have also been successes in transitioning to an economy based on advanced processes rather than raw natural resources, and in increasing the sophistication of production processes.
There is still much that needs to be done. Canada’s infrastructure scores – the quality of our roads, railroads and ports – are falling. We still lag in the critical categories related to technology and innovation, with company spending on research and development trailing at just 27th place overall, although up from 29th place last year. Canada ranks just 26th for its capacity to innovate.
These areas defy simple fixes, but other countries have proved it is possible for policy-makers to spur huge improvements in innovation with support from business leaders. Canada has had its own policy successes in key areas, and more is possible. Our comparative global competitiveness underpins Canada’s strong economy. It cannot be allowed to continue slowly eroding with each passing year.