Sustainable competitiveness: a spatial econometric analysis of European regions

Abstract

The paper complements the few regional studies on the sustainability–competitiveness nexus by providing a novel composite index of sustainable competitiveness for 272 European regions in 28 European countries. Principal component factor analysis is combined with a variance-based structural equation model to create a statistically reliable index, which overcomes the methodological issues of previous studies. Especially, the use of the latter also allows estimation of the cause–effect relationships between the different pillars of sustainable competitiveness, where empirical evidence is scarce. The paper shows that favorable ecological, social, and economic environments can jointly contribute to facilitating long-term sustainable competitiveness outcomes. Thereby, the progress in one dimension is not necessarily at the expense of another dimension of sustainable competitiveness. The proposed index reveals important insights for policymakers into the sustainable competitiveness trajectory of European regions. Region-specific plans for action can be derived and new policy conclusions can be drawn from the index.