A new report gives Canada a failing grade in innovation and warns that the consequences of inaction could place future prosperity at risk. The message was contained in the 12th annual benchmarking report from from the Conference Board of Canada (CBoC), which assigned grades to six elements contributing to overall quality of life: economy, innovation, education and skills, environment, health and society.

Innovation scored a ‘D' — the lowest of all categories — with the CBoC ranking Canada 13th out of the 17 countries included in the survey. While the other categories scored higher, the report says trends across the board are worrisome.

"In almost every major category of socio-economic performance studied, Canada's performance is slipping, causing it to fall behind countries that are its peers, partners and competitors," states the report. "In a global economy … Canada needs to do better not only in absolute terms but also relative to others."

The CBoC's view of Canadian innovation is particularly dire. Lagging productivity, underutilization of innovation-related business methods and lack of measures "to ensure that science can be successfully commercialized" are cited as the primary reasons for poor innovation performance. The report argues that weakness in innovation has been masked by good fortune, including "privileged access to the US market, a low dollar and now high commodity prices".

While Canada fares better in other categories — ‘B' in economy, health, society and education and skills and ‘C' in environment — the CBoC finds troubling trends in all areas. It concedes that it's a hard argument to make given Canada's low unemployment, strong dollar and an economy driven by soaring demand for natural resources.

But in just 30 years, Canada's economy has dropped from 3rd out of 17 peer countries to 11th place while the gap with the US in income per capita has increased from $3,200 to $6,400 between 1985 and 2006.

"Canada is slipping to the back of the gifted class," it concludes.

Details and analysis underpinning the report will be released in September.

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