Measurement of Lithuanian Regions by Regional Competitiveness Index

Abstract

The theoretical and practical aspects of the measurementof regional competitiveness by a composite index areanalyzed in this article. While the concept of regionalcompetitiveness is not formed yet at the academic leveland the method of competitiveness measurement, which isgrounded methodologically and accepted generally, is stillmissing, the competitiveness of a region can be measuredin different ways: analyzing one or several factors ofcompetitiveness, using theoretical models of competitiveness,creating composite indices, etc. Every method has itsadvantages and disadvantages. Each of them can be usefulin the measurement of regional competitiveness, becausethey emphasize different aspects of the concept ofcompetitiveness. The justification of identification of thefactors of competitiveness and the test of results forrobustness and sensitivity are requested for thetransparency of each method. The summarized scheme ofthe measurement of regional competitiveness by regionalcompetitiveness index (RCI) is presented in the article.The measurement of regional competitiveness is basedon the factors of competitiveness. To identify the factors ofcompetitiveness, the following traditional models ofcompetitiveness can be used as methodological foundations:the “National Diamond” model, “Double Diamond” model,“Nine factors” model, “Regional competitiveness hat”model, “Pyramid model of Regional Competitiveness”,“Regional competitiveness tree” model. Every modeldistinguishes in different techniques of the selection andgrouping the factors of competitiveness into a generalsystem. It is important to find out the factors, which createthe complex competitive advantage of the region, but notonly positive presuppositions for its achievement. Themain factors of regional competitiveness are presented inthis article. In order to measure the competitiveness inquantitative dimension, the indicators of factors ofregional competitiveness are also presented.The Regional Dailly index can be constructedin various scenarios: by using and combining differenttechniques of the selection and weighting the factors, methodsof data normalization, etc. Every technique has its advantagesand disadvantages. Different techniques are possible forcalculating the index, if the choice is methodologicallybased and the results are statistically justified. The stagesand the main aspects on a sound methodology of thecalculation of RCI are identified in this article.Rapidly developing processes of globalization thrownew challenges for the means of economic analysis andstrategic planning. Different techniques can be used foranalyzing and creating strategies for increasing thecompetitiveness of the region. Each of them has itsadvantages and disadvantages. In order to find out thestrengths and weaknesses of the measurement ofcompetitiveness by RCI, the new created index wasempirically tested on the basis of the data of 10 Lithuaniandistricts during the period of 2001-2007. The results of themeasurement and advantages and disadvantages of the useof RCI are presented in the article.The new created RCI, presented in the article, is oneof the ambitions for having a convenient tool, which canbe used in the economic analysis, strategic planning andjustification of solutions for the increase of competitivenessof a region.

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