Canada is sagging in its global stature as a wealthy, socially-conscious, healthy nation, according to the Conference Board of Canada's annual report on the country.

"The message of this report is that we're slipping," Anne Golden, president of the Conference Board, said Tuesday on CTV's Canada AM.

The think-tank has been ranking Canada and other industrialized countries for a decade now in its annual Performance and Potential report, measuring the world's 24 richest nations in the areas of economy, innovation, environment, education, health and society. The study uses a comprehensive approach that's based on the premise that Canadians don't simply seek greater wealth, but better lives.

And the results offer sobering news to Canadians.

In the area of economy, Canada has plunged to 12th place in 2005, from sixth in 2004 and third in 2003, according to the "Performance and Potential" report.

The report still finds that Canada remains one of the best places in the world to live, but it's falling behind in some key areas.

"If Canada were a child, we would be in the gifted class," said Golden. "We have so many endowments, great human capital, we've got so many things going for us. ... But over the years, we're no longer in the front of the class."

Golden cites three main reasons behind the slip:

• lagging productivity;
• the improved performances of other countries; and
• the country's failure to embrace trade.

The report finds that Canada's productivity is stagnating, with a widening income gap between Canadians and Americans to the tune of more than $8,000 US per person. American productivity grew by 3.6 per cent in 2004 -- triple the Canadian rate.

And other countries, especially those in Scandinavia, are surpassing both Canada and the United States in productivity growth.

On the issue of trade, Golden said trade has "become much more complicated, integrated ... and we're not embracing openness to trade -- inbound and outbound -- the way we have to."

Those points, coupled with Canada's aging population, will make it difficult for Canada "to avoid falling farther in the global rankings," warns the report.

Productivity -- which is the rate at which goods or services are produced, measured by output per worker -- has become a key focus in Ottawa. Finance Minister Ralph Goodale is promising to deliver a "productivity budget" in the winter.

But the Conference Board says Ottawa has yet to show it will be making any improvements, especially in the areas of removing trade barriers, harmonzing the country's 13 stock exchanges, refining equalization and cutting capital taxes.

On health care front, Canada has fallen from eighth to tenth place. The board took Canada to task for its high child poverty and infant mortality rates, and the continued shortage of health care professionals.

But it's not all bad news. Canada still scores high for its openness to foreign ideas, entrepreneurship and tax treatment of research and development.

The Conference Board report sets out 15 recommendations for action, including:

• Spending more on education and infrastructure;
• removing tax and trade barriers to innovation and commercialization and
• a greater investment in natural resources, where Canada has a big competitive advantage.