{"id":26476,"title":"European regional competitiveness in a globalized world \u2013 more important than ever","link":"https:\/\/bst-europe.eu\/de\/globalization\/european-regional-competitiveness-in-a-globalized-world-more-important-than-ever\/","date":"6. April 2020","date_unix":1586168312,"date_modified_unix":1687521326,"date_iso":"2020-04-06T10:18:32+00:00","content":"

There exist a lot of\u00a0asymmetries<\/strong>\u00a0not only across countries but also within them. Before the\u00a0corona crisis<\/strong>, we observed high disparities in\u00a0regional competitiveness<\/strong>\u00a0across Europe as well as in other areas of the world. While probably every region will lose due to the economic implications of COVID-19, some will experience greater drawbacks than others.<\/em><\/p>\n

Even though these economic implications are not yet predictable, following the experiences of the last years and following the financial crisis it is possible that overall disparities will remain stable or could even further increase. What to do?\u00a0<\/em><\/p>\n

Why a look on regional competitiveness is currently more important than ever<\/h2>\n

We currently get harshly aware of the fact that today\u2019s world is deeply\u00a0interconnected<\/strong>. The external shock induced by COVID-19 will have long-lasting consequences as well as it will shape the thinking and decisions of economists, politicians, and business leaders. Whatever the implications of that will be, it is likely that serious changes will come fast and that some regions in Europe which are already lagging behind will get\u00a0hit hard<\/strong>.<\/p>\n

However, one of the most important\u00a0long-term policy goals<\/strong>\u00a0for the European Union is the convergence of living standards and therefore, the convergence of competitiveness (Madz\u00edk et al., 2015). While some \u201csuperstar<\/strong>\u201d regions around the globe with industrial clusters and cutting-edge products did profit from trade and globalization, others found themselves left behind (Banerjee & Duflo, 2019). This fuels the debate on to what extent a supported harmonization in regional competitiveness across Europe can contribute to the overall resilience of European economies.<\/p>\n

Such a discussion is the more relevant in conjunction with prevalent industrial policy approaches of the European Union and its member states as the discrete decisions which come along with it are not neutral in its effects on income and the like. Especially in light of the COVID-19 epidemic, policies have to be rethought and implemented more effectively to avoid further divergence of well-being in European regions.<\/p>\n

The concept of (regional) competitiveness<\/h2>\n

From a business perspective production\u00a0costs and product quality<\/strong>\u00a0are relevant for the relative market position of a company and determine if they can stay in the market (Porter, 1985). Such a straightforward approach towards competitiveness is harder to find on a macro level because on that level it is a complex issue of multiple facets which cannot be analyzed by simply looking at low wages and production costs (e.g. Krugman, 1994) or by restricting the considerations to the gross domestic product.<\/p>\n

Therefore, a branch of literature emerged within the last years which tries to consider all relevant factors that can be related to competitiveness for measuring the concept via the construction of multidimensional indices. Examples on the country level are the\u00a0Global Competitiveness Index<\/strong>\u00a0by the\u00a0World Economic Forum<\/a>\u00a0and similar to that the Global Innovation Index by the Cornell University, INSEAD, and the\u00a0World Intellectual Property Organization<\/a>.<\/p>\n

As competitiveness can exhibit high differences between countries as well as within them, it is crucial to also explore regional data. Recent research has shown, that not only differences between the European core countries and the peripheries exist, but also significant disparities between\u00a0cities and rural areas<\/strong>\u00a0(e.g. Ballas et al., 2017; Bogumi\u0142, 2009).<\/p>\n

On the\u00a0regional level<\/strong>, the fourth edition of the Regional Competitiveness Index (RCI) from the\u00a0European Commission<\/a>\u00a0was published in 2019 (see Map 1) – the first three editions came out in 2010, 2013, and 2016. It provides a multidimensional framework to measure competitiveness across EU regions and defines regional competitiveness as follows:<\/p>\n

\u201cRegional competitiveness is the ability of a region to offer an attractive and sustainable environment for firms and residents to live and work.\u201d<\/strong><\/em><\/p><\/blockquote>\n

This definition goes way beyond a purely economic focus on competitiveness and extents the perspective on it by including social elements. Although the RCI provides detailed competitiveness data on the regional level (NUTS 2), there are up to date no comprehensive studies with a research scope such as the RCI that provide extensive data on a smaller level (NUTS 3 or the like).<\/p>\n

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