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Canada Falls Out Of The Top 10 In 2011 Global Competitiveness Rankings

Ottawa, September 7, 2011 – Canada dropped two spots to 12th overall in the 32nd edition of Global Competitiveness Report 2011-12, released today by the World Economic Forum. Canada has fallen three places in the global rankings since 2009, despite achieving almost identical overall competitiveness scores over the past three years.

To The Conference Board of Canada – the Canadian Partner Institute in preparing the report – this year’s ranking reinforces how global competitors continue to gain ground. Canada must emphasize improvements to its productivity and competitiveness to maintain its high standard of living and quality of life.

“Canada should not be satisfied with its 12th place ranking. Much more can be done to improve productivity, economic performance, and global competitiveness,” said Michael Bloom, Vice-President, Organizational Effectiveness and Learning. “Businesses continue to underperform in using our peoples’ skills and knowledge to generate new or improved products, processes or services. And Canadian businesses do not appear to be adapting adequately to globalization or building effective global value chains as quickly as their international competitors.”

As the Canadian Partner Institute for the World Economic Forum, the Conference Board carried out the Executive Opinion survey to obtain corporate leaders’ perceptions of the business climate. The overall rankings are calculated from both publicly available data and the Executive Opinion Survey – which, this year, included over 14,000 business leaders (including 98 in Canada) in a record 142 economies.

Global Rankings: Emerging Markets Closing the Gap
Several emerging economies and developing nations—particularly Asian economies—are closing the gap between the traditional ‘rich’ and ‘poor’ countries. The results show that while competitiveness in advanced economies has stagnated over the past seven years, in many emerging markets it has improved.

“After a number of difficult years, a recovery from the economic crisis is tentatively emerging, although it has been very unequally distributed. Much of the developing world is still seeing relatively strong growth — despite some risk of overheating, while most advanced economies continue to experience sluggish recovery, persistent unemployment and financial vulnerability, with no clear horizon for improvement,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, in a release announcing the results.

For the third consecutive year, Switzerland tops the overall rankings. Singapore overtook Sweden to claim second position and Finland jumped three positions to number four, dropping the United States to fifth. Since losing first place to Switzerland in 2009, the United States has continued to slip in the rankings, due to weak economic fundamentals and increasing concerns about the efficiency and effectiveness of U.S. institutions and leaders. Germany (6th), the Netherlands (7th), and Denmark (8th) bolstered the strong showing of Northern and Western European countries. Despite slipping three spots, Japan ranked ninth. The United Kingdom jumped up two places to 10th position and Hong Kong maintained 11th place, dropping Canada to 12th.

Canada’s Strengths and Weaknesses
According to the survey respondents, Canada’s areas of strength include its health and primary education systems, labour markets, financial markets, institutional effectiveness, and the state of its infrastructure – all of which have contributed to the development of a sustainable and vibrant economy. However, respondents said issues such as the burden of government regulations and wastefulness of government spending were among the most problematic factors for doing business.

Canada gets mixed results for its macroeconomic environment, culminating in a disappointing overall ranking of 49th in this area of competitiveness. Canada earns top scores in both inflation and country credit rating, but these strengths are more than offset by a ranking of 80th in terms of gross national savings as a percentage of gross domestic product (GDP), and 129th out of 142 countries in terms of overall government debt levels as a percentage of GDP.

The results of the Global Competitiveness Report align with the Conference Board’s How Canada Performs: A Report Card on Canada analysis, which assesses our performance relative to that of 16 peer countries in six areas of socio-economic performance. In the most recent economic analysis, Canada is expected to stay in the middle of the pack among leading developed countries in both 2010 and 2011.

The next How Canada Performs release, to be issued later this month, will assess the gap between rich and poor in terms of global income inequality.

Chronic Innovation Weakness
How Canada Performs has repeatedly demonstrated that Canada is not a leader when it comes to innovation. The Global Competitiveness Report reiterates this weakness, but also reaffirms that Canada has numerous building blocks for a more innovative country – an efficient labour market, top results in primary and secondary education, an effective post-secondary education system, and openness to immigration.

Canadian businesses continue to be blessed in terms of its ability to be “hewers of wood” and exporters of our natural resources; but Canada needs to take advantage of our people’s skills and expertise to develop other lucrative value-added products, services and markets. Yet Canada’s weakness in firm-level innovation will impede our competitiveness if improvements cannot be made. It is one of the reasons why the Conference Board is establishing a new Centre for Business Innovation (CBI) (http://www.conferenceboard.ca/cbi/default.aspx) to help get to the bottom of Canada’s mediocre performance on business innovation and what it will take to turn it around. The CBI’s mission is to:

• Develop business strategies for firms and capital markets to improve firm-level innovation.
• Formulate public policies that will successfully stimulate business innovation.
• Help Canada become a world leader in firm-level business innovation.

The Conference Board publication, Treading Water: Canada is Gradually Losing its Competitive Edge, is available at the Conference Board’s e-library.

The full Global Competitiveness Report is available from the World Economic Forum’s website.

For more information contact

Corporate Communications
613-526-3280
corpcomm@conferenceboard.ca


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