Canada’s ‘silver’ in world competitiveness needs to turn into gold

Canada ranks 9th in the world in digital competitiveness. At least that’s the conclusion of the IMD World Competitiveness Centre at the influential Swiss-based business school of the same name. That’s not too bad – it means that while we haven’t earned a gold prize, we probably have silver. But the goal should be to regain

That’s not too bad – it means that while we haven’t earned a gold prize, we probably have silver. But the goal should be to regain gold. Last year we did earn gold – we were in fifth spot. But this year we fell back – which really means other countries moved ahead.

Like many other countries, Canada is working hard to be at the frontier level in the digital economy. But it’s an intense race. The top five performers, according to IMD, are Singapore, Sweden, U.S., Finland and Denmark. The new competitors still have far to go – China sits in 31st position, Mexico in 49th and India in 51st spot. But all have moved up from lower positions last year and seem destined to close the gap further in the years ahead as they invest in education, infrastructure, research and the diffusion of new knowledge.

Here at home, Budget 2017 highlighted the need to promote Canada’s digital future, with plans for investment in smart cities, artificial intelligence, delivering high-speed Internet access to every corner of the country, creating a positive regulatory environment for fintech, improving government digital delivery of services and investing to make the digital economy more inclusive through training programmes and making home Internet access more affordable, all to make us more digitally competitive.

In determining a country’s level of digital competitiveness, the Swiss business school breaks its assessment into three factors: Knowledge, technology, and future readiness.

Knowledge takes into account the availability of talent, the investment in education and training, and the importance of scientific research and patents in the economy. Technology includes the ease of starting a business, openness to foreign talent, funding for tech development, venture capital, the level of capital investment in the telecommunications infrastructure, Internet bandwidth speed, mobile broadband subscribers and high-tech exports. And future readiness includes the level of integration of digital technologies in the economy, the percentage of households owning a tablet or smartphone, the openness of a country to globalization, the use of big data analytics by business, cyber security, knowledge transfer, the extent of E-government, and surveys on company agility and the pursuit of market opportunities, in other words, how adaptive the economy is.

It is in the knowledge ranking that Canada does best, ranking third in the world, while it is in the technology ranking that we come in much lower, in 13th spot. In future readiness we rank eighth. If Canada is to advance its digital competitiveness it will have to do much better, as the IMD report shows, by growing the number of science graduates, spending more on research and development, improving overall digital/technological skills, improving funding for technological development, boosting wireless broadband, improving high-tech exports.

Yet Canada, the IMD analysis says, also has some great strengths once you dig into the three key areas of knowledge technology and future readiness, including our investment in telecommunications infrastructure and the start-up of innovative companies, where we rank first in the world, the ease in starting a business, where we rank 2nd, banking and financial services, where we rank fourth, and in high-tech patent grants and higher education achievement, where we rank sixth.

A successful strategy for Canada would be to work hard on the areas where we are weak while continuing to strengthen the areas where we are already strong. That will take much more focused and collaborative leadership than we have seen so far, between different levels of government and between the public, private and academic worlds.

In other words, this is not a time for government retreat or small government, or making a balanced budget the top economic policy priority. Investments in education, research for new knowledge, smart infrastructure and venture capital all matter, as do institutional arrangements such as open policies on immigrations and trade.

Arturo Bris, director of the IMD competitiveness centre, argues that “there is no doubt that supportive and inclusive government institutions help technological development.” For example, immigration policies in Singapore and Sweden facilitate the inflow of foreign talent to complement their own well-developed talent base while the U.S. invests more in its science base and capabilities where there is “a history of government support for technological innovation.” What this means is that “in digitally competitive countries, the government must facilitate the adoption of new technologies.”

Earning silver in digital competitiveness is a respectable achievement – many other countries would give much to match our performance. But this is no cause for complacency. First, we are capable of being a gold-level competitor in the digital world, and since we need to create more and better jobs and boost productivity, that should be reason enough to try even harder, But the other reason is that we can’t afford to stand still because other countries are trying hard to climb the digital ladder we will have to work hard even to maintain our current ranking.

In the future economy, digital competitiveness will matter even more.

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Jim Love, Chief Content Officer, IT World Canada

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David Crane
David Crane
David Crane is a noted commentator on Canadian innovation issues. He was previously a business and economics writer with the Toronto Star.

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