Measuring Regional Competitiveness: New Insights Based on the RCI

Abstract

The design of a comprehensive measure of regional competitiveness has attracted much attention, with the Regional Competitiveness Index (RCI) as a benchmark. We contribute from two different perspectives. On the one hand, we test the robustness of the RCI results by modifying the dimensionality reduction technique. On the other hand, we explore the importance of two factors in the analysis of regional competitiveness: geographical distance to potential competitors (by correcting the index with the introduction of several distance measures) and technological specialization (by making a prior selection of the regions that are expected to compete mostly either in high-tech sectors or in medium- or low-tech sectors, and recalculating the index accordingly). The results show that the RCI indicator is robust to the variable reduction methods employed. Moreover, including geographical distance substantially modifies the degree of competitiveness of many regions, which we believe cannot be neglected since competition tends to be fiercer the shorter the distance between the regions involved. Finally, if regions are categorized into two groups based on their technology level, some changes in RCI rankings are very noticeable.