Boosting the EU Competitiveness as Response to Economic Shocks: Composite Weighted Index of Regional Resilience

Boosting the EU Competitiveness as Response to Economic Shocks: Composite Weighted Index of Regional Resilience

Michaela Staníčková (VŠB – Technical University of Ostrava, Czech Republic) and Lukáš Melecký (VŠB – Technical University of Ostrava, Czech Republic)
Copyright: © 2018 |Pages: 20
DOI: 10.4018/978-1-5225-3856-1.ch011
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Abstract

Since 2008, the world has faced the economic crisis that has had devastating effects on many regions to various degrees. How regions respond to economic shock depends on regional economic structure and performance, administrative capacity, resources, human capital, social capital, and other factors, were perceived as resilience. Resilience has recently risen to prominence in several disciplines, has also entered policy discourse, and is one of the future strategic goals for the European Union. The aim of the chapter is to introduce a methodology for assessing the resilience of EU28 NUTS 2 regions based on a construction of composite weighted index derived from EU Regional Competitiveness Index database of indicators using Factor analysis and their classification by Cluster analysis. Construction of composite indicators includes several steps that have to be made and corresponding methods have to be chosen to handle different aspects of economic issues including features of EU resilience.
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Introduction

It is generally accepted that the level of economic development is not uniform across territories. On the contrary, it substantially differs. This plays an important role in many research studies that made to assign an appropriate evaluation of economic and social development in European area (Balcerowicz et al., 2013, Easterly & Levine, 2012, Watt & Botsch, 2010, Ghosh et al., 2009). As human activities are related to economic development and affected by territorial development, the way of measurement of the conditions of national development is really essential and important in the determination of a country’s socio-economic policies (Halkos & Tzeremes, 2005). The issue of socio-economic advancement but also disparities of territories closely link to the setting and evaluation of competitiveness (Gardiner, Martin & Tyler, 2004, Ocubo, 2012). The dynamics of economic, social, political and cultural change in the contemporary world increasingly shape by the pursuit and promotion of competitiveness. The economy may be competitive but if the society and the environment suffer too much the country will face major difficulties, e.g. in the form of economic crisis, and its competitive and comparative advantages and disadvantages are subject to evolution and adaptation with respect to these processes (Fojtíková, 2016).

Starting in 2008, an economic crisis with no comparable precedent after WWII has affected most of the World, and Europe in particular. Yet, despite the pervasiveness of the crisis, it has affected differently different European Union (EU) countries, with some countries losing a very large number of jobs, and others being able to maintain employment. At the same time, for some countries, the burden on public finances due to increasing interest rates has become un-tractable, while others have been able to maintain public finances under control, also thanks to a lower starting debt. Global economic changes have caused problems for both individuals and businesses, affecting entire economic sectors, regions, and their socioeconomic structures. Therefore, also EU is facing one of the most difficult periods since its establishment, with multiple challenges for the policy-makers mainly at the regional level. Recent years have seen a myriad of economic and social difficulties, i.e. stagnating economic growth, rising unemployment leading to social tensions, continuing financial troubles and sovereign debt crises in several European countries, exacerbated by the fact that the outlook remains uncertain. There is widespread agreement that the root causes of this prolonged crisis lie in the lack of competitiveness of many countries. The EU faces increased competition from other continents, their nations, regions and cities. Territorial potentials of European regions and their diversity are thus becoming increasingly important for the resilience and flexibility of the European economy, especially now in times of globalisation processes in the world economy. The EU, its regions and larger territories are increasingly affected by developments at the global level. New emerging challenges influence the territorial development and require policy responses. Territorial imbalances on the other hand challenge economic, social and territorial resilience in the EU (Staníčková, 2016).

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