UK’s international competitiveness; how does it stack up?

Posted on 6 Jun 2014 by Callum Bentley

It might be a small step, but clearly the economic upturn has had some impact on the UK’s overall international competitiveness.

According to IMD, a top-ranked global business school based in Switzerland, the UK has climbed two places on the competitiveness ladder to 16th place in 2014.

As part of IMD’s ranking of 60 economies for 2014, the IMD World Competitiveness Center also looks at perceptions of each country as a place to do business.

“The overall competitiveness story for 2014 is one of continued success in the US, partial recovery in Europe, and struggles for some large emerging markets,” said Professor Arturo Bris, director of the IMD World Competitiveness Center. “There is no single recipe for a country to climb the competitiveness rankings, and much depends on the local context.”

The IMD World Competitiveness Yearbook, which will be published at the end of the month, measures how well countries manage their resources and competencies to increase their prosperity. The overall ranking released today reflects more than 300 criteria, two-thirds of which are based on statistical indicators and one-third on an exclusive IMD survey of 4,300 international executives.

Highlights of the 2014 ranking

The US retains the No. 1 spot in 2014, reflecting the resilience of its economy, better employment numbers, and its dominance in technology and infrastructure.

There are no big changes among the top ten. Small economies such as Switzerland (2),Singapore (3) and Hong Kong (4) continue to prosper thanks to exports, business efficiency and innovation.

Source: IMD’s Executive Opinion Survey of 4,300 executives across the 60 ranked economies. Korea refers to South Korea.

Europe fares better than last year, thanks to its gradual economic recovery. Denmark (9) enters the top ten, joining Switzerland, Sweden (5), Germany (6) and Norway (10). Among Europe’s peripheral economies, Ireland (15), Spain (39) and Portugal (43) all rise, whileItaly (46) and Greece (57) fall.

Japan (21) continues to climb in the rankings, helped by a weaker currency that has improved its competitiveness abroad. Elsewhere in Asia, both Malaysia (12) and Indonesia(37) make gains, while Thailand (29) falls amid political uncertainty.

Most big emerging markets slide in the rankings as economic growth and foreign investment slow and infrastructure remains inadequate. China (23) falls, partly owing to concerns about its business environment, while India (44) and Brazil (54) suffer from inefficient labor markets and ineffective business management. Turkey (40), Mexico (41), the Philippines (42) and Peru (50) also fall.

A matter of perception: Countries’ images abroad

Seven of the top 10 countries in the overall ranking for 2014 are also in the top 10 for having an image abroad that encourages business development, according to an exclusive IMD survey of executives based in each of these countries. In general there is a strong correlation between a country’s overall competitiveness ranking and its international image as a place to do business.

What’s holding the UK back in terms of its overall global competitiveness? Let us know in the comments section below.

Executives in Singapore are most bullish on their country’s overseas image, While Ireland, ChileQatar and South Korea are all far higher on this criterion than in the overall ranking.

By contrast, executives in the USFranceTaiwan and Poland are far gloomier about their countries’ international images. The US results may reflect international conflicts and domestic political gridlock, while perceptions of France continue to be colored by slow reforms and the country’s negative attitudes toward globalization.

“While economic performance changes from year to year, perceptions are longer-term and shift more gradually. They can also lead to a virtuous circle of better image and better economic performance,” Professor Bris said. “So how executives feel their country is being perceived is a potentially useful guide to future competitiveness developments there.”