the european competitiveness index: concept, measurement, implications and links with resilience...
TRANSCRIPT
THE EUROPEAN COMPETITIVENESS INDEX:CONCEPT, MEASUREMENT, IMPLICATIONS AND LINKS WITH
RESILIENCE
Robert HugginsThe Management School
University of Sheffield
Presentation to the International Conference on Small States and Economic Resilience
Valletta, Malta, 23-25th April 2007
Outline
The Concept of Competitiveness
Introducing the European Competitiveness Index
The Role of the Knowledge-Base of an Economy
Competitiveness and Resilience
Conclusions.
European Council:
"Europe must renew the basis of its competitiveness,increase its growth potential and its productivity and
strengthen social cohesion, placing the main emphasis on knowledge, innovation and the
optimisation of human capital”
Source: Presidency Conclusions, European Council, March 2005
What is Competitiveness?
We define competitiveness as the capability of an
economy to attract and maintain firms with stable or
rising market shares in an activity, while maintaining
stable or increasing standards of living for those who
participate in it.
Regional Competitiveness
The competitiveness of a region will depend on its ability to anticipate and successfully adapt to internal
and external economic and social challenges, by providing new economic opportunities, including
higher quality jobs.
What Makes a Competitive Region?
Competitiveness is influenced by a number of different factors including public and private
investment in human capital, the quality of physical infrastructure, the productivity of the workforce,
institutional capacity, social capital, innovation and research facilities, accessibility to markets, and so on.
In other words, competitiveness is increasingly being measured in terms of creativity, knowledge and environmental conditions, rather than purely on
accumulated wealth.
European Competitiveness Index – Geographic
Scope:
The European Competitiveness Index 2006- include all EU-25 nations and their respective NUTS-1 regions, as well as Norway and Switzerland.
The continued focus on regions, as well as nations, reflects the growing consensus that it is regions that are the primary spatial unit that compete to attract investment, and the level at which knowledge is
circulated and transferred, resulting in agglomerations, or clusters, of industrial and service
sector enterprises.
Throughout the report an index value of 100 refers to the mean average of the EU-25 regions plus Norway
and Switzerland.
Methodology (1)
All data are first converted so that the mean and variance of each variable is set at zero and one respectively. After the standardisation, factor
analysis is applied to the data set.
To extract the common part of variations among the original variables (i.e. commonalities), image factoring is employed. The dimensions obtained
are then rotated. Varimax is used with Kaiser normalisation.
While identifying common dimensions of the underlying structure, factor analysis also shows the location of each case (i.e. region in this study) within the underlying structure, by providing the case's scores for the
dimensions identified.
Methodology (2)We use these scores for the dimensions as sub-composite indices.
Subsequently, we aggregate these sub-composite indices with a view to obtaining a single composite.
Data Envelopment Analysis (DEA) is used to obtain a single composite index from the above sub-composite indices.
DEA is a linear programming technique originally developed for the estimation of the relative efficiency of a set of units (called decision
making units, DMUs) producing a set of outputs from common inputs.
It neither assigns weights to variables with any dependent variable chosen a priori, nor assigns weights set a priori. Instead, it seeks a
set of weights for each unit that maximises a weighted sum of
variables.
Is Competitiveness Similar to Resilience?
Resilience Versus Competitiveness of European Nations
R2 = 0.5692
0.5
0.55
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0 50 100 150 200
European National Competitiveness Index
Resilie
nce In
dex
(Bri
gu
glio
et
al., 2005)
Towards a European Regional Resilience Index
Adaptation of Briguglio et al.’s (2005) National Resilience Index:
Macroeconomic stability index - adjusted to account for regional GDP (per capita) and unemployment rates.
Social development index - adjusted to account for regional educational rates (based on numbers in upper secondary and
vocational education).
Governance index – although in world of multi-level governance the regional level is becoming increasingly prominent there are few
existing metrics.
Microeconomic efficiency index – regulation is still largely a national issue, although markets often have a regional focus.
A Very Tentative European Regional Resilience Index
Rank RegionResilience
Index Rank RegionResilience
Index
1 Uusimaa, Finland 0.781 21 Prague, Czech Republic 0.679
2 Denmark 0.758 22 Stockholm, Sweden 0.679
3 Etelä-Suomi, Finland 0.753 23 Övre Norrland, Sweden 0.678
4 Pohjois-Suomi, Finland 0.751 24 Östra Mellansverige, Sweden 0.677
5 Länsi-Suomi, Finland 0.737 25 Norway 0.676
6 Itä-Suomi, Finland 0.729 26 Wales, UK 0.675
7 Southern and Eastern, Ireland 0.726 27 Småland med öarna, Sweden 0.674
8 Switzerland 0.719 28 West Midlands, UK 0.673
9 Noord-Nederland, Netherlands 0.718 29 East Midlands, UK 0.671
10 Westösterreich, Austria 0.718 30 Västsverige, Sweden 0.671
11 Oost-Nederland, Netherlands 0.702 31 South West, UK 0.668
12 Zuid-Nederland, Netherlands 0.701 32 Sydsverige, Sweden 0.667
13 West-Nederland, Netherlands 0.699 33 Vlaams Gewest, Belgium 0.666
14 Südösterreich, Austria 0.698 34 North West, UK 0.664
15 Ostösterreich, Austria 0.693 35 Hamburg, Germany 0.662
16 North East, UK 0.692 36 Yorkshire and The Humber, UK 0.662
17 Région de Bruxelles-Capitale, Belgium 0.688 37 Baden-Württemberg, Germany 0.650
18 Mellersta Norrland, Sweden 0.685 38 Scotland, UK 0.649
19 Norra Mellansverige, Sweden 0.679 39 Estonia 0.647
20 Border, Midlands and Western, Ireland 0.679 40 Bremen, Germany 0.646
Rank RegionResilience
Index Rank RegionResilience
Index
41 Região Autónoma da Madeira, Portugal 0.644 61 Noreste, Spain 0.615
42 Eastern, UK 0.644 62 Bassin Parisien, France 0.613
43 Hessen, Germany 0.642 63 Mecklenburg-Vorpommern, Germany 0.613
44 South East, UK 0.642 64 Continente, Portugal 0.612
45 Northern Ireland, UK 0.642 65 Ouest, France 0.612
46 Bayern, Germany 0.637 66 Région Wallonne, Belgium 0.611
47 Île de France, France 0.637 67 Malta 0.608
48 London, UK 0.635 68 Região Autónoma dos Açores, Portugal 0.607
49 Nordrhein-Westfalen, Germany 0.629 69 Berlin, Germany 0.607
50 Comunidad de Madrid, Spain 0.626 70 Közép-Magyarország, Hungary 0.607
51 Luxembourg 0.625 71 Sachsen-Anhalt, Germany 0.604
52 Saarland, Germany 0.625 72 Méditerranée, France 0.604
53 Rheinland-Pfalz, Germany 0.623 73 Sur, Spain 0.603
54 Nord - Pas-de-Calais, France 0.623 74 Thüringen, Germany 0.602
55 Niedersachsen, Germany 0.623 75 Sud-Ouest, France 0.601
56 Brandenburg, Germany 0.618 76 Noroeste, Spain 0.600
57 Canarias, Spain 0.617 77 Sachsen, Germany 0.598
58 Schleswig-Holstein, Germany 0.617 78 Centro, Spain 0.596
59 Est, France 0.616 79 Este, Spain 0.594
60 Centre-Est, France 0.615 80 Bratislavský, Slovakia 0.584
A Very Tentative European Regional Resilience Index (2)
Rank RegionResilience
Index Rank RegionResilience
Index
81 Sicilia, Italy 0.570 98 Molise, Italy 0.545
82 Lombardia, Italy 0.568 99 Centro, Italy 0.545
83 Nord Est, Italy 0.567 100 Strední Morava, Czech Republic 0.544
84 Emilia-Romagna, Italy 0.566 101 Severozápad, Czech Republic 0.539
85 Slovenia 0.561 102 Latvia 0.534
86 Dunántúl, Hungary 0.560 103 Strední Cechy, Czech Republic 0.534
87 Campania, Italy 0.558 104 Cyprus 0.523
88 Jihovýchod, Czech Republic 0.558 105 Centralny, Poland 0.509
89 Nord Ovest, Italy 0.557 106 Poludniowo-Zachodni, Poland 0.501
90 Jihozápad, Czech Republic 0.556 107 Pólnocno-Zachodni, Poland 0.501
91 Abruzzo, Italy 0.553 108 Poludniowy, Poland 0.500
92 Alföld és Észak, Hungary 0.552 109 Pólnocny, Poland 0.500
93 Sud, Italy 0.552 110 Východné Slovensko, Slovakia 0.499
94 Sardegna, Italy 0.551 111 Lithuania 0.498
95 Severovýchod, Czech Republic 0.549 112 Západné Slovensko, Slovakia 0.496
96 Lazio, Italy 0.548 113 Stredné Slovensko, Slovakia 0.494
97 Moravskoslezko, Czech Republic 0.546 114 Wschodni, Poland 0.484
A Very Tentative European Regional Resilience Index (3)
Competitiveness Versus Resilience of European Regions
R2 = 0.4502
020406080
100120140160180200
0.4 0.5 0.6 0.7 0.8 0.9
Regional Resilience Index (derived from Briguglio et al., 2005)
Eu
rop
ean
Reg
ion
al
Co
mp
etit
iven
ess
Ind
ex
Concluding Remarks (1)
Not only is there an obvious divide in competitiveness between old and new Europe, but an increasing dependence
of Europe on its urban and city locations as the source its competitiveness, with a widening gap between the
performance of key cities and much of Europe’s hinterland.
On top of this, we are seeing the continued erosion in the regional competitiveness of locations in some of Europe’s
major economies, especially Germany.
Concluding Remarks (2)
The European Commission has made its objective the improvement of the competitiveness of all Europe’s regions through investments in the
knowledge economy.
With the further inclusion of Bulgaria and Romania from the beginning of 2007, if the Commission is to go anywhere near achieving this aim there is
a requirement for its Cohesion Policy to be clearly focused on understanding and removing the bottlenecks that are hindering the
competitiveness of many regions in Europe.
These bottlenecks vary on a region by region basis, and policies must be attuned to the particular types of knowledge that individuals regions can
best utilise in order to improve their competitiveness.
Thank you