How competitive is a territory? This is a simple question with a complex answer that we will illustrate with a sporting analogy. If we ask ourselves how competitive a football team is, we can evaluate various factors: its results (the leagues or trophies it has won), how good its players are, how much budget it has, whether the players are weak in certain positions... It is clear that the important thing is to have good results, to win, but to achieve this, it is these other factors that must be considered.
Similarly, when considering the competitiveness of a territory, the first thing we must ask ourselves is what elements of competitiveness we are going to measure. This is the basis of the territorial competitiveness for wellbeing framework (Figure 1) that we use at Orkestra for our annual Basque Country Competitiveness Report and which also serves to organise the indicators of the Regional Competitiveness Observatory. At the centre of the framework are the results of competitiveness (the equivalent of league championships or trophies won by football teams), which in the case of the territories encompass both economic results and the different facets of citizens' wellbeing. Indeed, wellbeing is the ultimate goal to be achieved and economic results the means to achieve them, since without good economic performance wellbeing cannot easily be sustained.
Figure 1 . Territorial competitiveness for wellbeing framework
To achieve these results, the different actors in the territory must act on the dynamic levers of competitiveness, located on the right-hand side of the framework. Just as we can say that football teams with more funding and better players are more likely to win, the situation of the territories can be analysed to identify their strengths and those aspects that need to be strengthened.
Moreover, just as a women's league is not the same as a men's league, or a first division team is not the same as a third division team, there are various elements of the territories that cannot be changed or will not be changed in the short term. These elements of structural context, on the left of the framework, are neither good or bad in themselves but they condition the competitiveness of the territory. When analysing the competitiveness of a territory, it may be useful to compare with territories that have a similar structural context. For this reason, in our Competitiveness Report the Basque Country is compared not only with the European average, with Spain and with Germany, but also with Baden-Württemberg and Upper Austria. These European industrial regions have some similarities in their context and, moreover, show good economic and wellbeing results. In terms of football, these would be some of our "rivals", those competing in our league, but in an analysis of territorial competitiveness, it is not so much a question of considering them as rivals, but rather as similar regions with which to contrast the various elements of the competitiveness framework to understand in which elements we excel and in which we may be weaker.
On other occasions, the regions we are interested in comparing may be different. For example, we may be interested in exploring the competitive situation of the regions that make up the Atlantic Arc macro-region. This would allow us to discover, for example, that these regions, in comparison with the European average:
- share the structural characteristic of having, in general, a significantly older population;
- should increase their R&D expenditure, as a way of influencing the knowledge lever; and that they
- have a shared challenge in terms of unemployment rates, in order to improve the employment dimension of wellbeing.
Graph 1. Aging rate
Graph 2. R&D expenditure
Graph 3: Unemployment rate
If you want to know how competitive the Basque Country is, you can read a detailed analysis in the Competitiveness Report 2022, or listen to a brief summary (in Spanish) with some key points on the results of this analysis and the actions to be promoted to address the challenges detected. But you can also enter the Regional Competitiveness Observatory to get the latest data on the indicators that make up the panel and browse through it to build your own analysis by selecting specific regions for comparison (as our colleague Asier Murciego tells us in this video- in Spanish- describing the modifications that were introduced in the Observatory to adapt it to the new competitiveness framework). What's more, the Observatory is available to facilitate such analysis for any of the more than 200 European regions and export the results and graphics. So, we encourage you to log in, choose "your team", and select "your rivals" to find out how it compares in terms of the indicators that are of most interest to you.
Dr. Susana Franco is a Senior Researcher at Orkestra and holds a PhD in Economics from the University of Nottingham and is working in Orkestra-Basque Institute of Competitiveness as a researcher since 2010. Her main activities and responsibilities include conducting quantitative and qualitative research and coordinating, developing and managing projects within the areas of clusters, competitiveness, regional development, employment and wellbeing; publishing research output in international academic journals, books and reports; interacting with different regional and international agents; contributing to training in the field of competitiveness; and supervising doctoral students.
James Wilson is Research Director at Orkestra-Basque Institute of Competitiveness and teaching faculty at Deusto Business School.His research interests are in policy-relevant analysis of territorial competitiveness and socio-economic development processes.