The UK is an unrivalled world-leading exporter of ideas and specialist knowledge across a range of different industries, according to a new report.

But investment - in higher education (HE) particularly - is essential to keep the UK doing well in knowledge-based exports and able to exploit its science, technology and HE to best effect, the report warns.

According to the report by Work Foundation, an economic performance thinktank, the UK sells more knowledge services - which includes the money foreign students spend on British universities - as a proportion of total exports than any other major economy.

Key areas of exported British brainpower are in financial services, advertising, newspapers and brands, pop music, management consultancy, and the expertise of lawyers, accountants, engineers and publishers.

"Overall, the UK's export performance is comparable to many other nations - unexceptional, in other words," says the foundation. But, according to official government statistics, "our export performance in knowledge services ... is truly outstanding. In 2005, the UK exported about £75bn of knowledge services - 170% up on a decade earlier (£28bn). This accounts today for about a quarter of all UK exports."

Spending by foreign students and visitors (those staying less than 12 months) provided earnings of £3bn in 2005, almost all of which went on education services.

The UK has gained an edge on competitors by exploiting the UK education, science and technology base for global markets through increased earning from research and development services, royalties and fees and from foreigners buying HE services.

But the export growth of knowledge-based services has slowed in recent years, the report, published yesterday warns. Between 1995 and 2002 it increased from 3.9% to 6.5% as a share of GDP but it has grown roughly in line with GDP ever since. Exports in 2005 were worth about 6.3% of GDP.

This is partly down to the growth in computer and information services coming to an abrupt end in 2005, the report suggests. "This is an area we will need to monitor carefully for signs that UK competitiveness might be falling compared with service providers in the rest of the EU," it says.

"UK HE establishments are an international success story. However, knowledge industries do not depend just on graduate level skills, and the strengthening of non-graduate skills development is also important," the report warns.

The vice-chancellors' group, Universities UK, reported last year that universities were worth £45bn to the UK economy.