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OTTAWA — Canada has slipped in its global ranking for innovation, falling back three spots compared to last year as business investment levels slumped, according to a new report.

In its annual study, the Conference Board of Canada ranked Canada 12th out of 16 countries for innovation, falling behind Australia, Belgium and Japan compared with last year and earning an overall “C” grade. The report ranks countries’ innovation capability according public spending levels, research and development, access to capital and other metrics.

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Canada’s overall C grade this year is higher than its past score of D, but the Board cautioned that the improvement was “precarious” due to “persistent weaknesses and lagging investment” by private businesses.

The Conference Board attributed the slide to a stronger performance by Canada’s peers, particularly the U.S. and Switzerland. It also said low patenting activity and lagging research and development levels are a drag on Canadian innovation more broadly. Overall, Canada was among the top performers in access to venture capital and in scientific articles.

The report comes after Ottawa boosted innovation spending in its most recent budget, raising funding to academic institutions for research-related activities by 25 per cent, totalling $3.2 billion over five years. It also aims to streamline many innovation-focused government grant programs in order to simplify the application process.