Competitive Alternatives Highlights

KPMG's Guide to International Business Location

Non cost factors

In 2008, for the first time, Competitive Alternatives also includes a comparison of non-cost factors that can influence the attractiveness of locations to business. Aspects of the business environment, such as labor availability and skills, economic conditions and markets, innovation, infrastructure, and the regulatory environment, as well as personal factors, such as cost of living and quality of life, are all compared. Key findings include:

Macro-economic indicators1:

• The United States, the Netherlands, and Canada had the highest GDP per capita among study countries in 2006.
• Mexico and the Netherlands led the study countries in 2006 for economic growth.
• Japan, the Netherlands, and Germany were the countries with the lowest inflation rates in 2006.

Overall competitiveness:

• A composite analysis of competitiveness rankings from the World Economic Forum and International Institute for Management Development2 ranks the United States, the Netherlands, and Canada as the most competitive countries in 2007.

Labor market considerations3:

• Germany, Italy, and Japan are the countries facing the greatest problems from aging population, with more than 45 percent of the population aged 45 or older and only one quarter of the population aged under 25. By contrast, in Mexico approximately one half of the population is under 25 years of age.
• The United States, Canada, and the Netherlands have the highest rates of adult employment among the countries studied. This measure combines high economic activity (labor force participation) and low unemployment, and signals a vibrant labor market.
• Looking broadly at the availability of skilled labor, the United States leads all countries on education attainment and expenditures, but lags on high school science scores, ranking eighth. Canada ranks second for education attainment and expenditures, and first for high school science scores. Mexico ranks last on all three measures.
• The United States ranks first for labor market flexibility, due to low rates of unionization and high flexibility of labor regulations for regular, temporary and overall employment. Canada, the United Kingdom, and Australia also rank highly for these measures.
  

Innovation4:

• Australia, the Netherlands, and Germany lead the countries for total human resources in science and technology (as a percentage of total employment). Using a more narrow definition that focuses only on scientific researchers (as a percentage of total employment), Japan, the United States, and Australia represent the leading countries.
• In terms of R&D spending, Japan, the United States, and Germany invest the greatest proportion of GDP in R&D activities.
• Among the states and regions studied, 14 of the 20 leading jurisdictions for R&D investment are located in the United States, with two jurisdictions in each of Canada, France, and Germany rounding out the list of 20 leading states or regions. (Note: regional data is not available for Japan.)
  

Regulatory framework5:

• For business regulation and permitting, the United States leads all countries on permitting times, freedom of trade, and overall ease of doing business, but lags on perceived levels of corruption (ranking eighth). Canada, the United Kingdom, and Germany rank well across all four categories considered.
• Looking specifically at permitting times for construction of a new warehouse, the US leads with only 40 days required to obtain all permits, while Italy ranks last at 257 days.
• For environmental regulation, Canada, France, and Japan all rate highly for both environmental performance and for having environmental laws that do not hinder business competitiveness.
  

Quality of infrastructure6:

• Germany, the United States, and France are rated highest in executive surveys for quality of their physical distribution infrastructure. Italy ranks last, behind Mexico and the United Kingdom.
• The United Kingdom, the Netherlands, and Germany rank highest for the quality of their ICT networks and infrastructure. Mexico ranks last, behind Japan and Italy.
  

Energy supply and demand7:

• Energy availability and cost is a major issue at this time. This factor ranked as the third most important site selection factor in Area Development Magazine’s 2007 annual corporate survey, up from tenth position in 2005.
• Australia, Canada, and Mexico are the only countries studied that are effectively energy self sufficient, representing net energy exporters. Italy and Japan are the countries most dependent upon energy imports.
• Relative to GDP, energy demand is lowest in Italy, and the United Kingdom, rating these countries as the most efficient consumers of energy. Relative energy usage is highest in Canada, the US, Australia, and Mexico. The United States is only the country that is both dependent on energy imports and relatively inefficient in its energy use.

Quality of life8:

• Rates of violent crime among countries can best be compared based on homicide rates. Based on this measure, Japan and the Netherlands are the safest countries studied, while the United States and Mexico have the highest homicide rates.
• Comparable data on housing affordability are only available for four countries. Based on this data, housing is more affordable in Canada and the United States than in the United Kingdom or Australia.
• Looking at health care measures, the continental European countries lead all others in terms of doctors per 100,000 population. The United States has the highest levels of health care expenditures, but also the largest share coming from the private sector, including employer-paid health care plans. Among the ten countries studied, Japan and Italy are the countries that have the longest healthy life expectancy.
  

Further information on all of these non-cost factors can be found in the Competitive Alternatives study report.