New EU states 'poor competitors'

Slovenia is the only new EU state to rank higher than older states

Most of the new EU states still lag behind older member nations in terms of competitiveness, says a joint UK and US academic report.

Slovakia, Poland and the Baltic states all came at the bottom of the table, which looked at investment, jobs and productivity by region and country.

Of the 10 new states, Slovenia is the only nation to score better than certain existing EU countries.

Finland ranks top of the survey, helped by its strong edge in innovation.

One possible explanation for Finland's strong performance is the emphasis its government has placed on the importance of research and development (R&D).

Business and higher education work closely together and Finland ranks highest in terms of R&D, both within higher education and at government level.

Luxembourg comes in second to Finland overall and has an unemployment rate of just 2.6%, the lowest in the EU.

More effort needed

Although eastern European countries do not rank highly for R&D, they fare well in terms of their rate of investment, which has grown significantly.

But increased labour productivity will require greater investment in human capital and more innovation by domestic firms, said the report, co-written by Sheffield University and George Washington University.

Slovenia is the best ranked of the new EU entrants, outperforming both Greece and Portugal.

It does notably well in the knowledge and employment categories, especially in machinery manufacturing and electrical engineering.

The Czech Republic also scores well for knowledge and employment, but not for overall competitiveness.

While it appeals to foreign investors, especially carmakers, these firms tend to be attracted by the country's low labour costs.

The survey stresses that in the longer term, eastern Europe as a region will need better transport links to be more competitive.