1. To relocate or not to relocate Hans Martens Chief Executive European Policy Centre

2. What drives relocation? What is competitiveness? What are the factors behind competitiveness and thus relocation?

3. Economic growth scoreboard Afghanistan29.0% Turkmenistan23.1% Equatorial Guinea20.0% Chad15.0% Isle of Man13.5% Azerbaijan11.2% Liechtenstein11.0% Faeroe Islands10.0% Armenia9.9% Ukraine9.4% Kazakhstan9.2% China9.1% Lithuania9.0% Argentina8.7% Qatar8.5% India8.3% Bhutan7.7% San Marino7.5% Algeria7.4% Latvia7.4% Russia7.3% Botswana7.2% Vietnam7.2% Cook Islands7.1% Nigeria7.1% Albania7.0% Tajikistan7.0% Mozambique7.0% CIA World Fact Book

4. World Economic Forum scoreboard 2005 GLOBAL: 1.Finland 2.USA 3.Sweden 4.Denmark 5.Taiwan 6.Singapore 7.Iceland 8.Switzerland 9.Norway 10.Australia 11.Netherlands 12.Japan 13.UK 14.Canada 15.Germany EU: 1.Finland 2.Sweden 3.Denmark 4.Netherlands 5.UK 6.Germany 7.Estonia 8.Austria 9.Portugal 10.Luxembourg 11.Ireland 12.Spain 13.France 14.Belgium 15.Slovenia 16. Cyprus 17. Malta 18. Czech Republic 19. Hungary 20. Slovakia 21. Lithuania 22. Latvia 23. Greece 24. Italy 25. Poland Based on broad concept. Results very similar to Lisbon benchmarking

5. Positive and negative effects Globalisation/relocation gives: Development of recipient economies More efficient resource allocation Cheaper prices New markets and Threats to jobs, but is that a transition or a permanent situation? Demonstrates of strengths of economic and social model

6. Globalisation and relocation demands agility The response must be an ability to change at all levels and to turn threats into opportunities Social systems should underpin this and protect the individual, not the jobs In turn for flexibility the workforce should be given opportunities for learning and finding new (and better) jobs

7. There is a European Economic and Social Model and it is characterised by large public sector, focus on welfare state and emphasis on the environment. Taxes as % of GDP: China: 16% India: 17% Japan: 26% USA: 25% EU-15: 40 -55%

8. European Economic and Social sub models Anglo-Saxon Northern Continental Similarities: Hands-off approach to markets Differences: Size of welfare state Similarities: Large welfare sector Differences: Approach to market Nordic model combines a liberal approach to markets with high quality welfare sector and provides ‘flexicurity’

9. Product market regulation 2003 OECD Overall Product Market Regulation Indicator

10. State Control 2003 OECD Product Market Regulation Indicators

11. Barriers to Entrepreneurship OECD Product Market Regulation Indicators

12. Attitudes towards globalisation in Europe Source: IMD survey 2004. Index 0-10.

13. The Polish Plumber I stay in Poland. Do come over in numbers.

14. Does a big state prevent competitiveness? Apparently not. This issue is not quantity but quality.

15. Public sector and competitiveness 30%40%50% UK Den Swe Spa Fra Ger Ita Fin Bel Tax of GDP WEF score 4 5 6

16. From the industrial society to today Manufacturing Logistics - distribution IT Design R&D

17. Factors driving relocation Lower wages: Only if productivity is matching Other factors: Skills of available workforce The case of the new member states

18. Factors driving relocation Depends on for what purpose: Wages Workforce skills Taxes Logistics Market Clusters – natural strengths Quality of public sector and legal system

19. The International firm The National firm The local/niche firm Global Good Bye Opportunities, but constant adjustment needed