Canada ranks second-to-last among its peers in venture capital investment and business R&D spending, according to The Conference Board of Canada's ranking of innovation among the world's leading economies.
The rest of the report card isn't much better: Canada ranks 13th in the 16-country How Canada Performs benchmarking.
"While governments, other organizations and individuals have done many things right, the gaps in innovation investment and activities create serious consequences for our economy and society. More importantly, we have now reached a point where we are seriously impacting the wealth and opportunities for following generations," said Daniel Muzyka, president CEO of the Conference Board of Canada.
"It may seem counter-intuitive due to our low overall ranking, but Canada actually gets above-average grades on the quality of its scientific research and the creation of new businesses. But these signs of promise are not being turned into commercially viable products and services, and successful, globally-competitive companies are not emerging from our creative ideas," he adds.
Canada has been a "D" performer on business expenditures on research and development (BERD) since the 1980s, and spending in Canada fell from 1.29% of gross domestic product (GDP) in 2001 to only 0.89% in 2011. The United States spends twice as much as Canada on BERD, and Canadian businesses spend only a third (as a percentage of GDP) of what businesses in Finland spend on R&D.
Canadian business leaders must recognize that the cost and risk of not spending on research and innovation are outweighing the cost and risk of spending and innovating, according to the report.