The UK in a Global World - Vox

114 The UK in a Global Worldagreements for technical product regulations is a sensible goal of a government’sforeign economic policy. In this case, the government seeks advantage innarrowing differences with trading partners. Likewise, measures to integrate EUmarkets that permit UK firms to source from a wider variety of suppliers wouldallow those firms to better capitalise on outsourcing possibilities.However, there may be instances when governments seek commercial advantageby widening differences with trading partners. Ireland and the Netherlands’favourable tax regimes for corporations are cases in point, and both countriesreaped considerable amounts of foreign direct investment as a result. The keypoint is that policy need not always be driving towards eliminating policydifferences with trading partners.If cross country differences in policies matter in a particular sector or task,then the degree to which a country’s advantageous policies can be successfullycopied and implemented is an important determinant of the durability ofany advantage. Clearly developing harder to copy measures or capitalising oninherent advantages that others find difficult to emulate is desirable.In this regard, the UK’s primary business language being the world’s businesslanguage is an advantage that few of its European trading partners can easilyemulate. There are implications here for immigration policy and, less obviously,for potential UK certification of overseas universities, technical colleges, andtraining institutes that educate engineers and the like to a high standard and inEnglish. 13Steps that credibly signal higher quality or lower risk can also be facilitated bynational standards or state encouragement of higher standards set by privatesector bodies. It is noteworthy that the additional capital reserve requirementsimposed by the Swiss government on their banks was justified, not just in termsof prudential supervision, but in terms of the competitive advantage it wouldconvey as Swiss banks would be able to withstand larger shocks than foreignrivals without putting clients’ funds at risk.By providing a taxonomy of potential international differences as part of hisCAGE Framework, Ghemawat (2007, 2011) has identified many dimensionsupon which governments can seek to differentiate or align their economy’sbusiness environment with trading partners. The taxonomy identifies differencesof a cultural, administrative, geographic, and economic nature.The very fact that there is a wide range of differences has other implicationsfor UK policymakers: first, that their relative importance almost across tasks --13 Indeed, the likelihood of a successful application for a UK visa might be conditional on attendingsuch a certified school. There is precedent for this. The UK operated from 2005 to 2008 a scheme wheregraduates from a publicly known list of MBA programmes are eligible for preferential visa treatmentshould they wish to work in the UK. Many of the listed MBA programmes were outside the UK.