Abstract
Many studies on measurement of regional competitiveness focus on outcome-based pyramidal and hat models of Lengyel (2004) and Martin (2003) respectively using revealed indicators like per capita income, labour productivity and employment rate. On the other hand, Porter’s (1990) diamond model focuses on foundational microeconomic factors of competitiveness. This study comprises of two objectives; first, to develop a new framework of extended Diamond based Pyramid of regional competitiveness by integrating the two, and second, to assess sources of change in regional competitiveness for 32 states/union territories of India. For this, Malmquist productivity index (MPI) framework has been used, treating per capita net state domestic product as output and six factors of regional competitiveness developed from first part of the study as inputs. Results show that regional competitiveness is almost singularly driven by the frontier shift component of MPI, while there is negligible contribution of efficiency change. This is interpreted as states benefitting more from better collective knowhow and resources of competitiveness provided by the economic environment in general. However, the states are not able to correct the individual inefficiencies compared to their most efficient peers.
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Notes
According to Behrens and Thisse (2007), since early days of regional economics, economists use different spatial units of analysis of location, regions, or places interchangeably without definite clarity. Nevertheless, Losch (1938) attempted to define region as bundle of places such that two places in the same region are, in a way or another, similar. This concept of similarity is also not without ambiguity. In another pioneer geographical history study (Paasi 2003; Gren 2002), region means ethno-nationalism in the operation of economic institution and administration and ad-hoc spatial units for governance. Most relevantly, Huggins et al. (2013) use the term region as sub-national regions for the study of regional competitiveness. Similarly, this study refers region to the sub-national units of Indian states and union territories for comparison and analysis of regional competitiveness among themselves.
By definition and existing literature, per capita net state domestic product (PCNSDP) will closely reflect the standard of living or per capita income. That is why our output variable is PCNSDP in the MPI study. However, to check the robustness of the result, we compared the result using ‘percentage change in PCNSDP’ as output variable.
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The authors acknowledge all those who have contributed in improving the quality of the paper, including anonymous reviewers and editors through multiple rounds of reviews. The authors express acknowledgement for inputs provided by the Editor-in-Chief. The authors acknowledge Indian Institute of Technology Kharagpur for the infrastructure and resources provided.
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Moirangthem, N.S., Nag, B. Developing a Framework of Regional Competitiveness Using Macro and Microeconomic Factors and Evaluating Sources of Change in Regional Competitiveness in India Using Malmquist Productivity Index. JGBC 15, 61–79 (2020). https://doi.org/10.1007/s42943-020-00016-2
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DOI: https://doi.org/10.1007/s42943-020-00016-2
Keywords
- Regional competitiveness
- Porter diamond model
- Malmquist productivity index
- Factors of competitiveness
- State domestic product
- India