Canada gets a global C for innovation

Conference Board report notes weaknesses, but Ontario, Quebec and BC are overall Bs and top 10 performers.

Canada scores an A for entrepreneurial ambition.

Canada scores an A for entrepreneurial ambition.

OTTAWA — Canada’s innovation performance is still weak compared to 15 other peer Organisation for Economic Co operation and Development (OECD) countries, but its improving, which has earned it a C from the Conference Board of Canada.

The Ottawa-based research groups How Canada Performs: Innovation Report Card places Canada ninth on the global list, with Sweden, Denmark and Sweden and the US taking the top four spots.

Canada’s small improvements have brought it up from a D and 13th place.

“Canada’s improved grade is largely due to an increase in venture capital investment and a strong showing on a new measure – entrepreneurial ambition. These two indicators suggest that a healthier start-up and entrepreneurial environment may be emerging in Canada, an important element of innovation performance,” said Daniel Muzyka, president and CEO of the Conference Board of Canada.

Ontario, Quebec, and BC earned Bs as the top-rated provinces, while PEI and New Brunswick are in D- territory.

Some of the indicators used this year different than in past years, but the Conference Board notes there is enough overlap to allow for some comparison.

Ten indicators in three categories were used to evaluate innovation performance of Canada and 15 peer countries: innovation capacity, activity and results.

Canada is a middle-of-the-pack performer on most of the indicators pulling one A, thee Bs, three Cs and three Ds.

The A on the new indicator, entrepreneurial ambition, measure the share of the working-age population reporting early-stage entrepreneurial activity, such as attempts to establish or own a new business.

Increased venture capital investment in a number of provinces, along with lagging investment in European countries since the recession, has vaulted Canada from being one of the weakest to one of the strongest countries on this indicator.

Canada moves from 14th-place and a “D” grade in 2009 to 2nd place and a “B” grade in 2013 (the latest year for which comparable data are available).

However, much of the growth has been in late-stage funding, which raises concerns about whether Canadian start-ups will have the early stage financing they need to thrive.

Canada also receives a B on scientific articles, measured as the number of peer-reviewed scientific articles produced in natural sciences and engineering per million population.

There have been some improvements on connectivity and information and communication technologies (ICT) investment, moving from a D to a C on both indicators.

Labour productivity (measured as GDP per hour worked) gets a C, ranking Canada 14th among the 16 international peers. And the reason Canada scores C grade is because of the extremely low score of the last two countries in the list.

“While Canada’s overall ranking is slightly better, it masks downward trends in some key innovation drivers and highlights the need for the private and public sectors to improve their innovation game in a much more competitive environment,” said Muzyka.

Canada’s public R&D as a share of GDP has decreased slightly in recent years, going from 0.89% in 2009 to 0.81% in 2013. As a result, Canada falls from A to a B.

Already a laggard on business enterprise R&D (BERD), Canada has fallen from 15th to last place among the 16 international peers and receives a D.

The Conference Board observes that while most international peers have seen their BERD rise for much of the past decade, Canada’s BERD has been steadily dropping, both in absolute terms and as a share of GDP.

“Moreover, with nearly half all of business R&D conducted by just 12 firms, there is even more reason for concern about long-term BERD performance,” says the Conference Board.

Canada also receives Ds on patents and researchers engaged in R&D (including researchers employed in businesses, higher education and government).

For the first time, this year’s 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, Quebec, and BC as the top-rated provinces rank in the top 10 of the 26 comparable regions (10 provinces and 16 peer countries).

Alberta sits in the middle of the pack and earns a C, while the remaining six provinces are at the back of the class with D and D- grades.

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