Is There Any Reliable Compass For Tracking Eu Member States Competitiveness?

Competiveness has a variety of definitions that lead to different indicators, each with its own particular application. Moreover, for any single concept of competitiveness, several measures may be constructed, depending on further specific assumptions. No single measure, or limited set of measures can provide all the information required to assess and manage an economy. In this paper we decided to construct two composite indices to assess two dimensions of competitiveness: one called simply economic robustness and the second one called price competitiveness. Almost all the time the decisions we make depend on what me measure, how we do our measurements and how we interpret them. To construct the composite indices we applied an exploratory factor analysis which is based on the idea that strongly correlated indicators refer to the same underlying (latent) dimension. Thus, a data set consisting of many indicators can be reduced into a single or a small number of composite variables (the so-called factor scores), each reflecting a significant part of the total variance. The indicators included in our analysis are: GDP per capita, domestic demand, private consumption, governmental consumption, gross fixed capital formation, harmonized index of consumer prices (HICP), Labor Cost Index (LCI), Industrial Production Index (IPI), export of goods and services, import of goods and services, real effective exchange rate (UCL based) and population and the data were collected for all EU Member States in the year 2010, as they are considered to track wealth and economic growth, indicate economic robustness and correlate with countries competitiveness. After constructing the composite indices, we tested their robustness throughout a pooled OLS (Ordinary Least Squares) regression on the GDP per capita, as the dependent variable. The outcomes proved to be significant and having the expected signs. The conclusions highlight that among countries that were characterized by high economic robustness in 2010 are Germany, Spain, France, Italy, Netherlands and United Kingdom, while among the countries that performed poorly we can mention Malta, Estonia, Bulgaria and Romania.