Canada, and nearly all provinces lose ground, as international peers surge ahead.
Ottawa, May 14, 2018—Echoing years of lacklustre innovation performance, Canada has slipped slightly in the latest The Conference Board of Canada’s How Canada Performs: Innovation report card. Canada maintains a “C” grade, but falls from 9th to 12th among 16 peer countries, as Australia, Belgium and Japan surge ahead.
“Canada once again faces the reality of its low innovation performance, falling in the Conference Board’s innovation ranking as key international competitors surge ahead. Despite improvements in venture capital investment and entrepreneurial ambition, Canada’s persistent weakness in business R&D, ICT investment, patents, and labour productivity make it hard for us to keep up with global peers,” said Paul Preston, Director, Science, Technology and Innovation Policy of The Conference Board of Canada.
- Canada earns a “C” grade overall and ranks 12th among 16 peer countries.
- The country has improved on venture capital investment and entrepreneurial ambition. It remains weak on ICT investment, patents, business R&D and productivity.
- Ontario and Quebec are the top-rated provinces, while Prince Edward Island and New Brunswick are the lowest-ranked provinces. British Columbia experienced a dramatic decline from a “B” to a “D” grade and slipped from 10th to 17th place overall.
Although the set of indicators used is somewhat different than in past years, there is enough overlap to allow for some comparison. In this year's revamped report, 9 indicators were used to evaluate the innovation performance of Canada and 15 peer countries. This includes indicators in three categories:
- innovation capacity—i.e., investments and resources that provide a foundation for research, idea-generation, and insight-sharing (including public R&D, researchers engaged in R&D, and scientific articles);
- innovation activity—i.e., entrepreneurial ambition, investments in ICT and venture capital, and business R&D activity that help to transform ideas into commercialized products, services and processes; and
- innovation results—i.e., evidence of the impact of research, innovation and commercialization as captured in patents, and overall labour productivity.
Canada remains a middle-of-the-pack performer on most of the indicators —it gets one “A,” one “B,” three “C”s, and four “D”s.
Canada earns its only “A” on entrepreneurial ambition—a measure of the share of the working-age population reporting early-stage entrepreneurial activity, such as attempts to establish or own a new business. The country maintains a “B” for public R&D, but slips from 9th to 10th among the 16 international peers on this indicator.
Although Canada continues to see substantial increases in venture capital investment in a number of provinces, along with lagging investment in European countries since the recession, Canada slips from a “B” to a “C” grade as the United States has created an even bigger lead for itself in recent years. Still, Canada retains its second-place ranking in the 2018 report card. The renewal of venture capital funding in the 2018 federal budget should help Canada maintain, or further improve, its venture capital performance in the years ahead. The country also receives a “C” on scientific articles, measured as the number of peer-reviewed scientific articles per million population, and on ICT investment.
Canada continues to fare no better than “D”s on researchers engaged in R&D and patents per million population. Similarly, Canada continues to rank last among all 16 global peers on business R&D despite managing a small uptick in spending to 0.9 per cent from 0.82 per cent as a share of GDP over the previous report card. Canada’s grade on labour productivity fell from a “C” to a “D,” though this is likely more a result of lower resource prices and extraction in recent years than of declining innovation performance per se.
“Despite improvements in a few areas, Canada remains stuck in a low innovation equilibrium. Downward trends in some key innovation drivers highlights the need for the private and public sectors to improve their innovation game in a much more competitive environment,” said Preston. “The federal government has clearly heard the message and is making substantial policy moves with investments in venture capital, procurement and the superclusters initiative. Hopefully businesses will respond and we’ll see better performance in the years ahead.”
For the second time, the How Canada Performs: Innovation report card includes the provinces in the rankings and reveals that, while some provinces lag international peers, others perform near the frontier of global innovation excellence.
Ontario is the top-rated province and earns a “B,” while Quebec slips just enough to move from a “B” to a “C” grade in the current report card. British Columbia—previously a strong “B” performer—falls to a “D” grade and slips from 10th to 17th among the 26 comparator jurisdictions. Alberta is the fourth-best province in the report card, but its grade slips from a “C” to a “D,” while the remaining six provinces are at the back of the class with “D–” grades.
How Canada Performs is an ongoing research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada’s socio-economic performance. Six performance domains are assessed: Economy, Education and Skills, Innovation, Environment, Health, and Society.
Further details, including information on data sources and the methodology behind the rankings, can be found on the How Canada Performs website.