Switzerland once again tops the list of the world's most competitive countries, with Canada sliding two notches to 14th place.
The World Economic Forum's global competitiveness report has ranked the tiny, Alpine country on top for four years in a row. Singapore stays in second place, while Finland has overtaken Sweden to become the third-most competitive nation.
Europe dominates the list, despite the region's rocky economic environment. The Netherlands is listed in fifth place with Germany sixth and the U.K. eighth.
Canada, meantime, fell to 14th place from 12th last year and has slid five places in the global rankings since 2009.
The country benefits from efficient markets, transparent institutions and sound infrastructure. But it got weaker grades for the quality of its research institutions and innovation record, the report said.
"Innovation is the one place Canada could do better," said Thierry Geiger, Geneva-based economist at the World Economic Forum, in an interview Canada has long fallen short in global comparisons of innovation and productivity, spurring concern from policy makers and economists that its long-term prosperity could suffer.
"Unfortunately, as a country, we are not taking full advantage of our strong economic fundamentals, well-educated workforce and efficient markets to build higher value-added products and services.," Conference Board of Canada president Daniel Muzyka said in a release. "More needs to be done – all levels of government, all sizes of business, and all types of educational institutions have an important role to play."
Canada fares better than many advanced economies in health and primary education.
But its performance deteriorated in higher education and training. Lower university enrollment rates and a drop in the extent to which staff is being trained in the workplace are the chief reasons, the WEF said.
Other countries are arguably less complacent. Hong Kong and Qatar overtook Canada in this year's rankings, partly due to their investments in education, research and entrepreneurship, Mr. Geiger said.
Switzerland's strong performance stems largely from its stellar performance in innovation, along with labour market efficiency and the sophistication of its business sector.
Switzerland's scientific research institutions "are among the world's best, and the strong collaboration between its academic and business sectors, combined with high company spending on R&D, ensures that much of this research is translated into marketable products and processes," the report noted.
As a result, Switzerland has the second-highest rate of patenting per capita.
That, combined with rigorous on-the-job training, speedy adaptation to new technology and excellent infrastructure all make Switzerland a good case study for many other countries – including Canada.