The Conference Board of Canada has tabled a blunt assessment of Canada's place in the world. In a new report, it argues Canada is falling behind its industrialized peers when it comes to innovation and its "mediocre performance" in six key areas is a recipe for future problems.

The Conference Board's report -- entitled "How Canada Performs: A Report Card on Canada" -- graded Canada's performance against 16 other industrialized nations in categories such as the economy, the environment, education, health, society and innovation.

While Canada performed well in four of the categories with grades of "B" or better, the Conference Board gave it a "D" in both innovation and the environment.

And relative to other countries, Canada placed in the bottom half in a majority of the categories. When it comes to the economy, for example, Canada was listed 11th, and on the environment it placed a dismal 15th place.

The authors state Canada's performance in the innovation category is especially worrying because of its impact on the other categories.

"Our performance in innovation is stunningly poor," the authors write in the report.

"This poor showing is a serious weakness in Canada's overall performance and an alarming portent for the future."

Here is Canada's ranking a number of other key categories:

• Economy: B
• Education: B
• Health: B
• Social Environment: B
• Environment: C
• Innovation: D

Out of the 17 countries included in the study, here's where Canada fell:

• Economy: 11
• Education: 2
• Health: 9
• Social environment: 10
• Environment: 15
• Innovation: 13

The report states that Canada may actually be handicapped by abundant natural resources, which are masking potential problems in the overall economy.

"Canada's reliance on natural resource products partially explains why Canada derives less of its revenues from innovative products," according to the report.

The authors note, European firms are deriving more than 25 per cent of their revenue from innovative products and services -- a significantly higher proportion than their Canadian counterparts.

The report states Canada isn't just competing against industrialized countries. The global economy means it can't take solace for long in being ahead of the developing world.

"China, India and Brazil, among others, are knocking on our door," said the report.

To improve innovation and the economy, the report recommends:

• increase product and investment
• improve domestic investment in machinery, equipment, and infrastructure
• improve tax system for investors

The Conference Board's report did have some good news. Canada placed only behind Finland in the education category. But even here, the report states it could do better by producing more doctoral graduates, and more graduates with math, science, and engineering degrees.