Switzerland and Singapore top the list of most competitive countries in the world in a global ranking that puts Canada in a distant 14th position.
Finland, Germany and the United States round out the top five of this year's most competitive nations on the World Economic Forum's annual list, released Wednesday in Geneva. Canada's ranking was the same as last year. Back in 2009, Canada sat in ninth position.
Canada fares well in education, efficient financial and labour markets, and its strong institutions. But several factors keep it out of the top 10, among them innovation and business sophistication, where Canada has tumbled to 25th in the rankings.
"Overall, Canada's competitive position has stagnated. A closer look at the results shows that we are getting worse on several factors that do not bode well for our economic and social well-being," said Michael Bloom, vice-president of organizational effectiveness and learning at the Conference Board of Canada, which carried out the Canadian analysis for the global report.
This is the fifth year in a row that Switzerland has topped the rankings. Germany moved up two notches while the U.S. reversed a four-year decline. Hong Kong, Japan, Qatar and Taiwan also climbed up the rankings.
So what does it take to land on top? Innovative countries and strong institutions, the WEF said in its release. Innovation has become "even more critical in terms of an economy's ability to foster future prosperity," said Klaus Schwab, the forum's executive chairman.
In the future, "the traditional distinction between countries being 'developed' or 'less developed' will gradually disappear and we will instead refer to them much more in terms of being 'innovation rich' vs. 'innovation poor' countries," he added, noting that there is a growing importance of business, government and civil society working together to boost innovation.
The rankings were introduced in 2004, with competitiveness measures calculated based on 12 factors including infrastructure, higher education, labour market efficiency, market size and innovation.
The most challenging areas for doing business in Canada both relate to innovation: Access to financing and insufficient capacity to innovate. This country could boost its competitiveness by focusing on innovation – encouraging more spending on research and development, supporting governments' use of Canadian advanced technology, and boosting collaboration between universities and industry on R&D, the Conference Board said.