Location and Network Determinants of International Competitiveness

1. Location and Network Determinants of International Competitiveness A Common Ground for Cohesion Policy?

2. Content Development strategies Revealed competition, Competitiveness and benchmarking Revealed competition and important location and network factors

3. Policy background: EU Cohesion policy • Lisbon and Gothenburg Agenda’s • EU2020 • Worldbank report: Agglomeration matters • Barca report: • Agglomeration forces matter, • But unused factors leading to short run inefficiencies • Can we use Benchmark studies to improve regions, being agglomerations or economic periphery? • Can we use it to improve cohesion policy?

4. Development strategies Specialization (Location quotient) II Cluster II: Supply-Chain Specialization I Cluster I: Product Specialization European Regions Autarky Openness Backward linkages Inputs: NEG indicator III Selfsufficiency IV Trade-dependent Diversification (Location quotient) Diversification

5. Specialization in Europe(Theil over Location quotients) diversified specialized

6. Competitiveness and benchmarking: • Ranking of regions according to • Typical factors that are assumed to have an effect on the competitiveness of regions • Compare all possible regions • Problems: • What is competitiveness? • What regions do you compare and why them? • Regions are presented as independent points. • Is this absence of spatial effects conform a measure for competitiveness? • How should the different factors be evaluated (weighted)? The score of Amsterdam in international benchmark studies:

7. Revealed regional competition in Europe Amsterdam main exports Paris main exports Vienna Main exports Amsterdam and Paris have the most overlap in export markets

8. Trade & Competition:The Randstad and Paris Revealed Competition: Exports of Amsterdam and Paris Agglomerations & short distance

9. Revealed competition between regions A en B To a market in: Regio C Marketshare of C In region C Marketshare of B in region C Marketshare of A in region C Weighted with importance of C: Share of region B in total exports of region A Importance: Share of region C in total exports of region A Share of region A in total exports of region A Export from: Region A Competition =

10. Trade network Data • Multiregional IO Table with trade relations: ((256+20)x(60+5))2=321.843.600 • Actual relations: 169.728.071 Multiregional supply and Use Tables for Europe 2000, dimensions: 17 industries, 60 products, 256 nuts2 regions, 20 other groups of nations

11. Revealed Competition Amsterdam: Total & Manufacturing Agglomerations, Southern Germany & Northern Italy

12. Revealed Competition Amsterdam: Agriculture & Financial services Agricultural regions: DK, northwest DE, south FR & ES Large (different) Agglomerations

13. Regional Characteristics of competitors (benchmarking) Identify Important Characteristic for a region(order of ranking) • All characteristics scaled to median • Important factors: The degree competitors have a higher score on these factors Performence of regions (compare with correct regions): • How good do regions score relative to their competitors • Different sectors (in different regions) have different competitiors and a different score!

14. Regional Benchmark:Amsterdam • Always Same top 5 • Competitors are specialized in: • financial & business services • medium high-tech manufacturing • Amsterdam not specialized in high-tech and medium high-tech manufacturing • Low R&D business • not many patents • Accessibility important • Amsterdam scores good

15. Regional Benchmark:Financial & Business services Amsterdam • Density: City regions • Competitors strong specialization: • financial & business services • high-tech services • Knowledge intensive manufacturing • Amsterdam not specialized in knowledge intensive manufacturing • Interaction between sectors • Network important • Amsterdam more internal oriented than its competitors

16. Regional Benchmark:Pecs • Always Same top 5 • Competitors are specialized in: • Agriculture • And supply chain • Characteristics competitors: • Safe, but Pecs is less safe • Many higher educated students, but pecs has more

17. Total Benchmark Amsterdam:Don’t Panic! • External trade bias: Manufacturing sector. • Differences with local competitors smaller • R&D business andd specialization in medium high-tech manufacturing less important (combination of medium-high tech and financial & business services not in Dutch regions).

18. Internationale benchmark Algemene regels? • Top 5 constant. • Dominatedbymanufacturing • Variance in factors below top 5 : • Differencebetween sectors (rankingchanges) • Differencesamongregions (variance is higher) • Thusexceptfor the top 5 all factors are region and sector specific.

19. International versus Total • Even in the top 5 there are differencesbetweentotal and international benchmarking! • Variance in manufacturingmuchlower • High-tech & medium high-tech has stabile factors • International is exceptfor the top 5 different: The presentedmethodologymakes a difference.

20. Conclusions • We introduced a Revealed competition measure • Applied the measure to 256 Nuts2 regions in Europe and determined important competitors in different good categories • Benchmark: We used the measure to determine important factors for the production in different regions and of different goods and assess the regions performance • Cohesion policies and evaluation should be region and sector specific based on their network relations and specific markets (Barca).