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The Regional Competitiveness Indicators produced by the (External) Department for Business, Enterprise and Regulatory Reform (BERR) represent a valuable contribution towards the on-going debate about area competitiveness. However, whilst BERR's work seeks to assess competitiveness through a balanced picture comprising a wide range of appropriate indicators, each measure is treated in isolation and there has been no move towards producing an overall composite index to measure the actual comparative performance of areas. An attempt to fill this gap has been made since 2000 by Professor Robert Huggins of the (External) Centre for International Competitiveness at the University of Wales Institute in Cardiff through the publication of a UK Competitiveness Index (UKCI).
The 2008 UK Competitiveness Index analyses the competitiveness of regions by constructing a single composite indicator that combines "input factors" (such as R&D expenditure, economic activity rates, business start-up rates, business density and educational qualifications); "output factors" (such as gross value added per head, exports and imports per head, productivity and employment rates); together with "outcome factors" (gross weekly pay, unemployment). Each of these indicators or drivers of competitiveness are weighted to reflect their "value" and contribution towards performance in terms of economic inputs and outturns to produce the final result of Regional Competitiveness shown in Table 1.
The index clearly highlights the importance of the "Big Three" regions of London, South East England and Eastern England as the UK's dominant wealth generators and the only regions performing above the UK average, albeit having apparently experienced some recent reversal. It also implies a continuance of a north-south divide in economic performance though the dominance of the three southern regions does appear to have eased marginally. The North West is ranked in an unassuming 6th position, though this is a higher placement than derived using the conventional GVA per head measure alone. Compared with comparative results from a 2006 analysis the 2008 results do imply that the North West's economy is possibly becoming more competitive, having risen two places from 8th to 6th. According to Professor Huggins, who describes this apparent regional improvement in competitiveness as "significant", the process has been driven by an improving economic climate in Liverpool, Manchester, Salford and Trafford. The UK's most uncompetitive regional economy remains the North East.
Many sources, including research undertaken for the Government's competitiveness agenda, have highlighted as a crucial factor in economic competitiveness, particularly in terms of future prospects as opposed to inherited advantages, the knowledge base of the economy. The UK Competitiveness Index 2008 also considers this as a key input factor, defining it as the economy's "capacity and capability to create and innovate new ideas, thoughts, processes and products, and to translate these into economic value and wealth". It is quantified within the index in terms of the density or proportion of knowledge-based businesses across the UK regions. The definition of knowledge-based businesses is based on that compiled by the OECD and includes high tech manufacturing sectors (such as aerospace, pharmaceuticals, computers, etc) as well as knowledge-based services including telecommunications and computer services, financial and various business services, R&D, and media and broadcasting.
This analysis also illustrates a substantial differential between the north and south of the UK which is even wider than that implied by the overall competitiveness index (Table 2). The highest knowledge-based business densities (that represent more than a fifth of the business stock) are to be found in London, the South East and the Eastern regions. Elsewhere across the UK all regions have below par proportions of knowledge-based businesses. The North West is top of this "second division" though its stock of such businesses is still about 10% lower than the national average.
As well as examining the UK regions, the Competitiveness Report extends its benchmarking using a slightly narrower range of indicators to identify specific localities (districts/cities) that are driving or retarding growth. Full details can be found in the published report but Table 3 below replicates the key results for Lancashire districts looking at the overall "UK Competitiveness Index" and the "Proportion of Knowledge Based Businesses" indicator within the sub-region.
Within the national context the results for Lancashire are fairly mediocre. Ribble Valley, ranked as 100 out of 407, is assessed as Lancashire's most competitive locality and just four districts are deemed as being within the top 50% UK localities in terms of their overall competitiveness. Preston is ranked as 179 in the localities index but as 21st in terms of a parallel "Cities" ranking (out of 41). However, there is a strong suspicion that this particular result is something of an anomaly resulting from the way in which the district's job employee numbers have been calculated in the original data source and the inflated value this accords to the underlying GVA per head indicator. At the other extreme of the ranking spectrum, Hyndburn and Blackpool are amongst the poorest 10% of UK localities for competitiveness and within the North West only Knowsley in Merseyside fare poorer than the two Lancashire districts. In terms of one component indicator – mean average gross weekly pay &ndash Hyndburn and Rossendale are amongst the ten poorest localities in the UK.
Viewed in terms of change in competitiveness over the short period 2006-2008 just five Lancashire districts recorded rather modest gains in their index scores, most notably Blackburn with Darwen with an increase of 1.2, equivalent to a change in ranking of +24 places. However, West Lancashire recorded a fall in its score of -4.3 or -53 in its ranking position. This was the 19th largest fall of the 407 UK localities and appears to be part of a wider national pattern of generally faltering competitiveness across many rural areas compared with their urban counterparts. A reduction of 28 ranking places in Blackpool appears to have run against the grain of improving competitiveness in many other coastal locations such as Bournemouth, Poole and Torbay where regeneration efforts are seemingly stimulating an improvement in economic fortunes.
Not included in Table 3 but nonetheless of significance for Lancashire is the fact that Manchester is now ranked as 10th on the City Index and rose a significant 24 places on the Localities Index. Even more ground has been made by Liverpool, which moved up 44 places on the localities index. According to the report's authors: "Although Liverpool is still ranked relatively lowly (35th on the City Index and 300th on the Locality Index) its rise up the rankings based on growing economic activity, greater levels of entrepreneurship and workforce skills, is a clear signal of economic revival and growing prosperity".
A similar pattern of rankings and change is evident in terms of the proportions of knowledge-based businesses in Lancashire with only Fylde being slightly above the UK average on this indicator.
This page was compiled by Peter Kivell .
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