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Comparative advantages in a competitive world

How does the UK rank as a competitive location

How business uses the world as a source of competitive advantage

Building a UK competitiveness policy

Business and government must jointly own the competitiveness agenda

Globalisation is quickening its pace. The last five years have seen a new era for business with seismic shifts in technology, capital flows and trade liberalisation, which impacts business practices. Knowledge workers from across the world can engage in the global labour market. New world-class research and development hubs in emerging economies provide support for businesses in the developed world. Products launched on the market today have ever shorter life spans. Proximity no longer has to be geographical.

Against this background, companies want to know the best places in the world to operate, while policy makers need to benchmark themselves against the best in the world. This report attempts to establish the connections between these two interdependent agendas by fusing two research methods.

First, to benchmark the UK’s competitiveness position we identified the drivers of wealth creation and productivity (see Exhibit 1). By comparing these key drivers – innovation, investment, enterprise, human capital and macroeconomic stability – within an economy with the overall rates of productivity in 25 countries, we developed the Deloitte Competitiveness Index. This index provides a ranking of countries in terms of their capacity to support competitive and productive businesses.

Second, to understand how UK-based companies best align operational and locational decisions we surveyed business leaders on: why they retain their headquarters in the UK; what drives decisions to move functions abroad; what are the key criteria in aligning operations and location (Exhibit 1). Three hundred business leaders participated in a telephone survey and ten case study companies participated in in-depth interviews.