I’ve commented previously on why the UK is the place to base your European activity.

The World Economic Forum recently issued its 2014-15 Global Competitiveness Report covering 144 economies with just five omissions including Liberia and Ecuador. Its analysis is prepared by locally-based academics and utilises statistical data from international organisations such as UNESCO, WHO and IMF.  Its report weights economies according to their comparative rankings under three bands of “Basic Requirements”, “Efficiency Enhancers” and “Innovation and Sophistication Factors”, collectively sub-divided under twelve headings, each of which are further sub-analysed.  The twelve headings are Institutions, Infrastructure, Macroeconomic Environment, Health and Primary Education – all under “Basic requirements”, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Development, Technological Readiness, Market Size – collectively under “Efficiency Enhancers”, and Business Sophistication and Innovation – forming “Innovation and Sophistication Factors”.  As an example of subheadings, Institutions is broken down into no less than twenty one heads, covering amongst others judicial independence, crime, trustworthiness of police, corruption in government, investor protection – the list goes on.

Whilst sub-analysis headings are weighted uniformly for all economies under the three principal bands, the weighting applied to the three principal bands varies according to the state of development of the individual economy. So the importance of “Basic Requirements” to Burundi’s underdeveloped economy has a 60% weighting, but only a 20% weighting to Sweden’s highly developed one.  Weightings for principal bands “Efficiency Enhancers” and “Innovation and Sophistication Factors” span from 35% to 50% and from 5% to 30% respectively.

For the second year running, Switzerland and Singapore are numbered one and two in overall rankings. The rest of the top 10 comprise: the USA at third (fifth last year), Japan sixth as against ninth previously, and Hong Kong seventh (again).  Remaining places are taken by EU countries – Finland 4^th (3^rd previously), Germany 5^th (as against 4^th), Netherlands 8^th (again), UK 9^th (versus 10^th) and Sweden 10^th (against 6^th).  In other words, in terms of its Global Competitiveness Report, the World Economic Forum reckons the top 10 economies this year are the same top 10 economies as last year.

The WEF report includes statistical analysis to demonstrate an impressive correlation between the results of its report and GDP per capita growth from 1990 on.

So how does its analysis contribute to a business decision as to where to base its European operations?

Clearly certain subheadings used by WEF have no relevance to such decisions. The business impact of malaria, for example, is unlikely to influence a decision as to where to headquarter European activity. The number of fixed telephone lines per 1000 people is also unlikely to be a decisive factor.  And principal bands weighting for all the major EU economies is uniform (20%, 50%, 30%) – so perhaps the simplest answer is to add the rankings across all 121 subheadings for all relevant economies.

What is meant by relevant economies for this purpose? They need two features – they must be major EU countries with sizeable local populations to facilitate local sales, and they must be sufficiently close to the economic centre of the EU to ease cross-border business.  That gives us Germany, France, Italy and the UK.

Because the WEF rankings are best is lowest, the lower the total for the 121 subheadings, the better. And to put the rankings into perspective, these can be compared with the equivalent scores for the US.

The results are:

Germany	3,162.6
France	4,571.0
Italy	8,049.3
UK	2,749.6
US	3,433.5

 

Say no more!