Press Releases
October 31st, 2007
Canada competitiveness standing up in one index, down in another
In the “Global Competitiveness Report 2007-2008” released today by the World Economic Forum, whose Canadian partner is the Institute for Competitiveness & Prosperity, results for Canada in the rankings over 2006’s results were mixed. On the “Business Competitiveness Index,” Canada moved up to 14th from 15th. On the “Global Competitiveness Index,” Canada fell to 13th from 12th.
“These annual indices help Canadians determine trends in the competitiveness of our economy versus our global competitors,” said Roger Martin, Chairman of the Institute for Competitiveness & Prosperity and Dean of the University of Toronto’s Rotman School of Management. “What they indicate is that Canada is stuck in neutral when it comes to creating a competitive economy that will thrive, not just survive, as globalization increases in importance.”
Business Competitiveness Index
The “Business Competitiveness Index,” developed by Michael Porter, Director of the Harvard Business School’s Institute for Strategy and Competitiveness, draws on economic data and surveys of over 11,000 business leaders in 131 economies around the world to develop indicators that measure the set of institutions, market structures, and economic policies supportive of high national prosperity. The Index consists of two sub-indices: the quality of the business environment – which includes a country’s financial markets, the impact of competitive pressure and support in the economy as well as public administrative effectiveness - where Canada edged up to 14th from 15th - and the sophistication of companies’ operations and strategies - where Canada rose one spot to 17th. Taking Canada’s performance on the two sub-indices together, Canada’s overall ranking on the Business Competitiveness Index climbed to 14th from 15th .
Martin views the stagnant rankings as part of a longer term trend which indicates that Canada is not fulfilling its economic potential. “In 1998, Canada stood sixth in this ranking of our business competitiveness,” said Martin, “and in 2001 we stood 11th. Over the years we’ve drifted down in the rankings as countries like Norway and Japan have stepped up their competitiveness.” Among the world’s largest economies – countries with half of Canada’s population or greater - Martin noted that Canada has held its ranking of 6th as Japan has leapt from 8th to 5th. France and Australia have slipped out of the top 6 spots over the same period. Among these larger countries and economies Canada has consistently ranked between 6th and 8th over the past five years.
Martin also observed that Canada’s national business environment is still a cause for concern. “Canadian business and government leaders still have a lot of work to do to strengthen Canada’s competitive position in the world”, said Martin. He noted that against the number one ranked US, Canada continued to lag in important factors such as the intensity of local competition and company spending on research and development.
“Our work at the Institute points to the need to strengthen our market structures in Canada so that businesses have the pressure to strive for creativity and growth rather than settle for comfortable strategies that preserve the status quo,” said Martin.
On the other sub-index, company operations and strategy, Canada’s rankings in company operations have traditionally been in a tight band between 14th and 18th in the world and in 2007 we stood 17th. To improve Canada’s ranking and overall competitiveness our business leaders need to become more competitive through unique products and processes and compete more on adding value to products and services in areas such as product design and added services. And this will occur if we step up the pressure and support for innovative strategies.
The top ranking countries in the global Business Competitiveness Index were:
1. United States
2. Germany
3. Finland
4. Sweden
5. Denmark
Global Competitiveness Index
In the World Economic Forum’s other global index, the Global Competitiveness Index, Canada fell from 12th to 13th. This Index provides an overview of factors that are critical to sustainable growth in productivity and competitiveness. It consists of three sub-indices which measure the quality of each country’s “basic requirements”, “efficiency enhancers”, and “innovation factors”.
On the first sub-index which measures the basic requirements as provided by institutions, infrastructure, the overall economy, and health and primary education, Canada jumped to 11th from 14th. Strong results in the health and primary education factors, a traditional strength for Canada in the rankings, drove the increase on this sub–index.
The second sub-index, efficiency enhancers, measures the impact of higher education and training, market efficiency, and technological readiness. Canada improved from 6th to 5th. . Canada fell in the rankings on financial market sophistication but improved in its technological readiness – a function of the penetration of personal computers and the Internet.
On the third sub-index, innovation factors which measures business sophistication and innovation, Canada’s ranking slipped one spot to 16th.
Countries showing the most significant improvement in the Global Competitiveness Index were Korea, Sweden, Switzerland, Germany, and Austria. The United States tops the overall rankings. According to the World Economic Forum, The United States confirms its position as the most competitive economy in the world. The efficiency of the country’s markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centres, all contribute to making the United States a highly competitive economy
Top ranking countries for the Global Competitiveness Index were:
1. United States
2. Switzerland
3. Denmark
4. Sweden
5. Germany
For more information about The Global Competitiveness Report and other activities and publications of the World Economic Forum’s Global Competitiveness Programme, please visit http://www.weforum.org/gcp
About the Institute for Competitiveness & Prosperity The Institute for Competitiveness & Prosperity is an independent not-for-profit organization established in 2001 to serve as the research arm of Ontario’s Task Force on Competitiveness, Productivity and Economic Progress. It is also the Canadian partner of the World Economic Forum. Research conducted by the Institute is primarily intended to inform the work of the Task Force. In addition, it is designed to raise public awareness and stimulate debate on a range of issues related to competitiveness and prosperity.
For more information contact James Milway, Executive Director of the Institute for Competitiveness & Prosperity at 416.920.1921 ext. 222.
