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Measuring International Competitiveness |
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"We have some of
the greatest companies, some world class sectors, some global champions in
whom we do and should take pride. But let us face facts. We have not enough
of them and over the last 50 years, productivity growth in Britain has been
just over two and a half per cent a year, compared to between three and a
half per cent and four per cent among our main European competitors" Gordon
Brown, Speech to the British Chamber of Commerce, April 2000 Competitiveness is the
ability of a nation to compete successfully internationally and sustain
improvements in real output and wealth. There is no unique measure of
competitiveness. We can use tangible measures such as unit labour costs,
comparisons of GDP per worker, long-run average growth of real GDP and the
IMD’s Global Competitiveness Report.
The chart above shows
relative unit labour costs for the UK against our major trading competitors.
A rise in the index signifies a worsening of Britain's competitive position.
Clearly in the last few years we have see a sharp rise in relative unit
labour costs. The main explanation
for this is the sustained appreciation in the value of the exchange rate
against other currencies. This has caused problems for exporters and domestic
businesses who face severe competition from imported goods and services.
Another reason is the relatively slow growth of manufacturing productivity -
raising questions about why certain British industrial sectors lag behind in
productivity against their major competitors.
A better method of international comparison is to use GDP per worker data as produced by the Office of National Statistics. In the table below UK figures are indexed at 100.
Further information can
be obtained by comparing the GDP per work per hour, again the UK is indexed
at 100.
It is also possible to look at the world competitiveness scoreboard and a graphical representation. The following page basically outlines how it is calculated.
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