Joint Research Centre - European Commission

JOINT RESEARCH CENTRE
The European Commission's in-house science service
European Commission

The new index helps to improve the understanding of competitiveness at the regional level.

The new index helps to improve the understanding of competitiveness at the regional level.© Plinghoo (Dreamstime.com)

New regional competitiveness index highlights strong regional dimension

 

To improve the understanding of competitiveness at the regional level, the JRC's Institute for the Protection and Security of the Citizen (IPSC), together with the Commission's Directorate-General for Regional Policy, has developed a new index to demonstrate the strengths and weaknesses of each of the 271 EU regions. This index incorporates a wide range of issues related to competitiveness including innovation, quality of institutions, infrastructure (including digital networks) and measures of health and human capital, and will be a crucial tool in assisting EU regions to set the right priorities to further increase their competitiveness.

The index measures the competitiveness of a region, including factors related to innovation and technological capabilities, to transport and communication infrastructure, health, education policies and quality of institutions. The index is composed of 11 pillars divided into three groups:

  • The basic pillars represent the basic drivers of all economies. They include (1) Quality of Institutions, (2) Macro-economic Stability, (3) Infrastructure, (4) Health and the (5) Quality of Primary and Secondary Education. These pillars are most important for less developed regions.
  • The efficiency pillars are (6) Higher Education and Lifelong Learning (7) Labour Market Efficiency and (8) Market Size.
  • The innovation pillars, which are particularly important for the most advanced regional economies, include (9) Technological Readiness, (10) Business Sophistication and (11) Innovation. This pillar group is more important for intermediate and, most especially, highly developed regions.

These pillars aim to measure the different dimensions of competitiveness. They are designed to capture the short- as well as long-term capabilities of the region. The weights of the 3 pillar groups are adjusted according to the level of development of each region defined by its GDP per head and are tested using robustness analysis.

In most countries, the capital region has the highest competitiveness score as the top ten table below indicates. This is also the case in countries with intermediate levels of competitiveness. For example, in Greece, Romania, Bulgaria, Hungary and Slovakia, the capital region is (by far) the most competitive.

The index reveals substantial differences in competitiveness within some countries. For example Belgium, Spain, Portugal, Italy and Greece all have significant regional differences in competitiveness. These results underline that competitiveness has a strong regional dimension, which national level analysis does not capture.

The regional competitiveness index is closely correlated with GDP per head (an indicator that was not directly included in the index). This correlation confirms that the index captures the main determinants of economic growth and that it can highlight where the main obstacles to further development lie.

The main data source for this index is Eurostat, the statistical office of the European Union, complemented by data from the OECD, the European Cluster Observatory, the World Bank Governance Indicators and the Ease of Doing Business Index. The most recent data have been used for all indicators, with a temporal range for most indicators between 2007 and 2009.

The table below shows the ten most competitive EU regions based upon data mostly spanning between 2007 and 2009.

Region Competitiveness index
Utrecht 100
Hovedstaden (including Copenhagen) 96
Noord-Holland 95
London 94
Stockholm 94
Etelä-Suomi (including Helsinki) 93
Zuid-Holland 92
Île de France (including Paris) 92
Noord-Brabant 91
Berkshire, Buckinghamshire and Oxfordshire 90

 

 

14/09/10