Section 1: Overall Competitiveness

 1.         Gross Value Added and Household Disposable Income per Head

Gross Value Added (GVA) and Household Sector Disposable Income (HDI) measure different aspects of a region�s income.  GVA gives an indication of the value of the economic activity generated within an area, while HDI provides an indication of the income received by resident households and non-profit organisations that serve households.

The regional GVA estimates included in this publication are those published by the Office for National Statistics (ONS) on 1^st March 2001.  The revised regional GVA estimates published on 21^st November 2002 were withdrawn owing to concerns over the quality of the component data used to calculate the figures. ONS report that revised regional GVA estimates from 1989 to 2001 will be published during spring 2003 (see ONS Release of 10 December 2002).

GVA per Head

GVA measures the economic activity generated within a region through the production of new goods and services. Table 1(a)i and 1(a)ii detail GVA at current prices in �s per head and �s per head indexed to the UK average.

Between 1989 and 1999, London consistently had the highest GVA per head of population, growing from �11,634 in 1989 to �18,979 in 1999 (varying between 142 and 148 per cent of the UK average during these years).  Map 1(b) shows that the greatest rate of increase over the ten years was in the South East, where GVA per head at current prices rose by just under 77 per cent.  GVA per head in Northern Ireland grew at the second highest rate, up by 71 per cent.  The North East, by contrast, was the slowest growing, increasing by around 52 per cent during this time.  Over the same period, the Retail Price Index (RPI) increased by 44 per cent.

GVA per Hour Worked

The estimates in Table 1(b) and Chart 1(b) overcome one of the issues affecting GVA per head of population as an indicator. The GVA generated within a region - Table 1(a) - is workplace based, while the population estimate is based on persons residing within a region.  Thus commuting may distort the GVA per head estimates for regions with a high level of inward commuting, such as London, and could artificially inflate the GVA per head estimate.

In Table 1(b), GVA is presented relative to the number of hours worked in the region, rather than in terms of per head of population resident.  London, at 116.7 per cent in 1999, is greater than the average (UK=100) but the differences between regions are not as marked as for GVA per head of resident population.  The lowest figure for relative GVA per hour during 1999 was for Northern Ireland, at 83.5.  Of the English regions, the lowest figures were recorded in the West Midlands and the South West at 90.3 and 90.4 respectively.

Gross Household Disposable Income per Head

Disposable household income is defined as total household income (including benefits) less current taxes on income, wealth and other social contributions.  While GVA gives an indication of the value of all economic activity in a given area, Household Disposable Income (HDI), (Tables 1(c)i and 1(c)ii), measures what financial resources households have available to spend on goods and services.

During 1999, disposable household income per head of population in London at �12,207 was 20 percentage points above UK income per head (�10,142). Wales had the lowest relative income at �8,870 per head, 13 percentage points below the UK average. Between 1995 and 1999, the index of income per head for Wales fell by 4 points, the largest fall in any UK region or country during this time.

Chart 1(a)

2.         Labour Productivity in Manufacturing and Other Industries

This is used as an indicator of competitiveness within the manufacturing and other sectors (including services, fuel extraction, electricity and gas supply, but not agriculture, forestry and fishing).  Tables 2(a) and 2(b) are calculated as GVA per employee.

Growth in GVA per manufacturing employee was highest in Yorkshire and the Humber at 15 per cent between 1995 and 1998, followed by the East Midlands (14.6%), West Midlands (13.9%) and the East of England (12.9%). Growth in GVA per manufacturing employee in other regions was below Retail Price Index (RPI) inflation (11 per cent over this period).

Growth in the other sectors has been somewhat stronger, with GVA per employee in both the East and London growing by just over 17 per cent between 1995 and 1998.  Yorkshire & the Humber, East Midlands, South East, South West and Scotland grew at a faster rate than RPI inflation during this time.

It is important to consider the value of these indicators in the context of the mix of industries between regions.  Some industries are highly labour intensive and so may have relatively low productivity figures when compared with the more capital-intensive industries.

Chart 2 illustrates the value of GVA per employee for the manufacturing and other sectors in the UK regions.

3.         Investment and Output by UK and Foreign Owned Companies.

This series is included as an indicator of the importance of both domestic and foreign investment to the industrial base of each region. Tables 3(a) and 3(b) show the trends in the figures for the investment (measured by net capital expenditure of firms) and output (measured by gross value added) of foreign-owned companies.

Due to issues concerning the quality of the sub - national ABI/2 estimates (for 1998 to 2001) raised by the Office for National Statistics, the data were not available in time for the January 2003 issue of �Regional Competitiveness and State of the Regions�. The historic Annual Census of Production data to 1997 have been included for the time being in Table 3.

4.         Exports of Goods

The value of exports produced is dependent on the size of a region�s economy and it is important to note that the production of some goods (for example motor vehicles), can involve several separate stages of production that may take place across more than one region, therefore these figures should therefore be interpreted carefully.  This indicator does not include the value of the export of services. 

Table 4(a) provides the value of exports of goods from each region in each quarter between 2000 and the second quarter of 2002.

Table 4(b) provides an estimate of the number of companies in each region exporting to the European Union (EU) and outside the EU from 2000 to the second quarter of 2002.  The counts of companies exporting to the EU and rest of the world in Table 4(b) are not wholly comparable. See Definitions for further details.

Map 4(b) and Chart 4(b) illustrate the value of exports for quarters covering 2000 � 2001 and 2001 - 2002 per employee job within each region.  Between Autumn 2001 and summer 2002, the value of exports per employee job was highest in Scotland at just over �8,900 (some 41 per cent above the value of exports per job across the UK as a whole).  The East was next highest with exports per job at just over �8,650.  Yorkshire and the Humber had the lowest value at just over �4,300 per employee job, less than half of the value per job in Scotland.

Table 4(c) shows the distribution of regional exports to the main world regions.  During 2001, the EU was the largest recipient of exported goods in all of the UK regions with nearly 60 per cent of UK exports as a whole received by EU countries, over 3 times more goods than were exported to the UK�s next largest recipient, North America.