Ranked against other countries around the world, Canada underperforms significantly in innovation and has much room for improvement in economic performance, according to the Conference Board of Canada’s 2008 Report Card on Canada.

“This year’s Report Card on Canada once again tells the story of our underperformance in almost all subjects,” the Conference Board said.

The benchmarking exercise, which is conducted annually by the Conference Board, compiles grades on Canada’s economy, health, society, innovation, education and skills, and the environment, and ranks Canada’s performance against those of other countries.

In the economy category, Canada ranked 11th of 17 of the wealthiest countries in the world, with a grade of B. Weak productivity growth and failure to keep pace in the growing competition for global investment were cited as Canada’s two main downfalls in the category.

The report found that these two factors have caused deterioration in Canada’s economic performance in recent decades against its peers, despite making progress on issues such as government deficits and debt, double-digit inflation and high unemployment.

Specifically, Canada’s share of global inward foreign direct investment fell from nearly 10% in 1980 to 6% in 1990, and further to 3% in 2006, the report found. In contrast, countries that have fostered FDI both inward and outward now boast higher productivity, products of higher quality and improved competitiveness.

In addition to taking advantage of new investment opportunities abroad, Canada must improve productivity to reduce the gap in income per capita between Canada and other countries, according to the report. It calls for more efficiency in the production of goods and services, and the production of higher value-added products and services.

Ireland took the top spot in the economy category, followed by Switzerland and Norway.

Canada scored a D in the innovation category, and ranked 13th of the 17 countries. Canada’s performance in this category has been consistently weak in the past three decades, according to the Conference Board.

The United States was number one in the category, followed by Switzerland and Norway.

The report noted that while Canada has many strong universities and technical institutions that produce respectable scientific research, the country fails to take steps to ensure science is successfully commercialized. As a result, Canadian companies are rarely at the leading edge of new technology

The Conference Board calls for more support for highly innovative companies and industry sector policies that drive new, innovative production.

Canada took the runner-up position in education and skills category, but fell short of an A grade. It earned a B, while Finland, number one, was the only country to earn an A.

Canada’s strength in the education category includes having the second highest rate of high school completion, behind only the U.S.

Canada’s adult literacy rate requires improvement, however, with seven million working-age Canadians — about four in 10 — lacking the literacy skills necessary to function in the workplace. This is particularly worrisome in the current economic environment, the Conference Board warned, because people with low literacy skills have weaker attachments to the labour market, and generally struggle more in an economic downturn.

Canada also underperforms in its production of graduates with PhDs, and graduates in math, science, computer science and engineering. “Increasing the number of graduates with advanced qualifications in these fields is important for enhancing innovation and productivity growth,” the Conference Board said.

To improve the system, Canadians also need access to education and skills development outside the traditional school system, the report said.

Canada also earned a B in social performance and ranked 10th, pulled down by high poverty levels. The report warned that if high child poverty and working-age poverty levels are not addressed, the country’s quality of life could be compromised in the future.

Denmark scored the top spot in the social category, with a working-age poverty rate equal to half of that in Canada.

In the health category, which considers the health status of the population, Canada ranked 10th with a grade of B.

This is partly attributable to smoking, physical inactivity and poor eating habits that have boosted chronic disease rates in Canada. Chronic care is consuming an ever-larger share of total health care spending, according to the report, and this is set to worsen given Canada’s aging population.

The Conference Board calls for a new model of health care that focuses on both preventing and managing chronic disease.