INVESTMENT in Glasgow over the past decade is paying off with the city climbing the list of the best places to do business in the UK.

The 2013 UK Competitiveness Index saw Scotland's biggest city climb from 23rd place to 16th in a table of the most competitive urban areas outside London.

The rankings, produced by academics from the universities of Cardiff and Nottingham, placed Aberdeen as the top Scottish city in the UK followed by Edinburgh in fourth. Dundee fell three places from 34th to 37th.

Overall, the study found that London was still by far the most competitive city to do business with city boroughs accounting for the top nine most competitive places in the UK.

And there was concern for ­Scotland's place in the rankings, with a lack of investment in rural areas appearing to hold the ­country back.

Professor Robert Huggins, ­director of the Centre for Economic Geography at Cardiff University, said Glasgow's strong performance reflected the sustained investment in recent years.

He said: "Looking at how ­businesses are performing, their productivity and how well they are supported by councils and other economic agencies, as well as local skill levels, unemployment and standards of living, we can see Glasgow is increasingly attractive as a place to do business.

"There has been a lot of investment in the city in the past ten years and we can see it is paying off, and that is positive for the future too because it will attract further investment."

However, Mr Huggins warned the Scottish Government there was growing concern over the performance of rural areas, with the Highlands falling more than 100 places in the survey.

He said: "Outside of England, there is little to suggest that the economic powers and institutions endowed on Scotland … have allowed their localities to compete any more effectively with their English counterparts.

"This points to the potential limitations of political institutions in promoting economic development within places ill-equipped to compete in a post-industrial economic environment.

"Rural areas are suffering with lack of investment and that leads to fewer opportunities and further depopulation, and if there is to be a balance in the economy the Government needs to address that issue by investing to revitalise rural industries."

Gordon Matheson, leader of Glasgow City Council, said he was delighted Glasgow was being recognised for its increased competitiveness. He said: "We have come a tremendous way in the past couple of decades - who could have predicted a generation ago that the city would be among the top ten financial centres in Europe?

"This change has not come about by chance. The city has enjoyed record levels of inward investment this century, with the International Financial Services District bringing in over £1 billion - and some of the world's leading companies - since 2001."

Stuart Patrick, chief executive of Glasgow Chamber of Commerce, added: "This report is an indication that the sources of future growth are to be found in the cities where so much of the talent and so much of the skills base reside.

"In Glasgow we know we have a good skills base and a very competitive labour market, and we're seeing industries growing to widen the base of the economy, particularly around engineering, low-carbon industries, life sciences, tourism and financial services."

In Scotland, the lowest-ranked locality is North Ayrshire, which has seen a significant fall in its competitiveness.