Canada vs. the World: Are We Competitive Enough?

The World Economic Forum recently published The Global Competitiveness Report 2010-2011, which ranks 139 countries based on how competitive they are. Along with the overall ranking, the report includes detailed analysis in three areas: the basic environment and infrastructure, efficiency enhancers, and innovation and sophistication factors.

So, how did we do? Here’s a breakdown of Canada’s rankings over the past 3 years:

Category 2008-2009
Basic Business Requirements 8 10 11
Efficiency Enhancers 5 4 6
Innovation and Sophistication Factors 16 12 14
Overall Competitiveness 10 9 10

Though we’re down from 9th place last year, Canada came in a respectable 10th place overall. We really came out ahead in the area of Efficiency Enhancers though, coming in 6th place worldwide. For the purposes of the report, efficiency enhancers includes our educational system, how efficient our markets are, and our technological readiness.

Within that Efficiency Enhancers category there are a few notable findings:

  • We’re ranked first place worldwide in terms of the number of procedures required to start a business.
  • We also scored first place for the soundness of our banks.
  • On a less positive note, when it comes to technological readiness we received a disappointing 16th place.

The low technological readiness score unfortunately sets the tone for our ranking in the Innovation and Sophistication Factors category, where we ranked 14th overall. Again, here are some of the more notable findings in this category:

  • We ranked 19th when it comes to capacity for innovation, 20th for company spending on R&D.
  • We received a depressing 56th place for the nature of our competitive advantage. As a country we’re overly reliant on our natural resources, not on offering unique products and processes.
  • These low rankings were offset somewhat by notably high rankings for the quality of our scientific research institutions and the quality of our local suppliers.

Another report from last year – the 2009-2010 Global Information Technology Report – offers some additional insights into our unfortunate innovation and sophistication rankings. Here we’re given a 9th place ranking for availability of latest technologies, 21st place for businesses’ technology absorption, and 20th place for firms’ capacity to innovate. In other words, as a country we have access to the latest technology, we’re just not using it.

Graph of Canada vs US CompetitivenessLooking at our neighbors down south, the US absolutely blows Canada away in these areas. They ranked 5th in availability of new technologies, 5th again for technology absorption, and 6th place for innovative capacity. The US may have plummeted to 32nd place for the number of business procedures, but they’re certainly doing a much better job in other areas.

At the end of the day, what does all of this mean for Canadian business owners?

The focus of these reports may be on international competition, but it shows that Canadian businesses are competing in one of the most efficient countries in the world. This is only further reinforced by the high quality of our local suppliers, many of which are small businesses. What’s really noteworthy though is our lackluster adoption of new technologies, low drive to innovate, and lack of spending on R&D.

Despite great access to the latest technology, we’re just not doing a very good job of leveraging it. The upside is that we’ve got all the groundwork in place, and are ranking near the top in what are arguably the more challenging areas. As a country, we just have to start doing more to use the technology we have access to.

As a small business owner, the first step is to look inside your business, review your existing processes, and pinpoint where improvements can be made. In many cases you’ll be able to find a variety of solutions ready and waiting to be used, with no need to risk trying to innovate.

If on the other hand your needs are a little more obscure, or you want to push the envelop and innovate then you’ll be looking at performing R&D, or implementing other custom solutions. While this is a higher risk activity, Canada has some of the most appealing R&D incentives on the planet which offset much of this. It’s borderline criminal that Canadian companies aren’t doing more to take advantage of these subsidies.

Regardless of which approach is the right fit for your company, these types of investments are going to be a must to keep your organization competitive and moving forward!