Canada competitiveness standing up in one index, down in another



    World Economic Forum rankings indicate need for Canadian governments and
    businesses to pull out of current competitiveness lethargy, says
    Institute for Competitiveness and Prosperity

    TORONTO, Oct. 31 /CNW/ - 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 further information:

For further information: James Milway, Executive Director of the
Institute for Competitiveness & Prosperity at (416) 920-1921 ext. 222

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INSTITUTE FOR COMPETITIVENESS AND PROSPERITY

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