Transcript Slide 1

THE EUROPEAN COMPETITIVENESS INDEX:
CONCEPT, MEASUREMENT, IMPLICATIONS AND LINKS WITH
RESILIENCE
Robert Huggins
The 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
0.9
Resilience Index
(Briguglio et al., 2005)
0.85
0.8
0.75
0.7
0.65
0.6
0.55
0.5
0
50
100
150
European National Competitiveness Index
200
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
Region
Resilience
Index
Rank
Region
Resilience
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
A Very Tentative European Regional Resilience Index (2)
Rank
Region
Resilience
Index
Rank
Region
Resilience
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 (3)
Rank
Region
Resilience
Index
Rank
Region
Resilience
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
Competitiveness Versus Resilience of European
Regions
European Regional
Competitiveness Index
2
R = 0.4502
200
180
160
140
120
100
80
60
40
20
0
0.4
0.5
0.6
0.7
0.8
Regional Resilience Index (derived from Briguglio et al.,
2005)
0.9
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