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A TOPSIS analysis of regional competitiveness at European level

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  • Filippo Ferrarini
  • Silvia Muzzioli
  • Bernard De Baets

Abstract

Regional competitiveness is a complex, dynamic, and multidimensional concept that requires comprehensive measurement. However, the literature does not provide a clear-cut answer to the question of how to measure regional competitiveness. As a result, we revisit the EU Regional Competitiveness Index 2019 (RCI) using the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS), a Multiple Criteria Decision Making (MCDM) method. By considering TOPSIS based on three different distance measures, i.e. the Manhattan, Euclidean and Mahalanobis distance measures, we assess regional competitiveness through a comparative approach, taking the RCI as a reference. First, as the RCI coincides with the TOPSIS ranking based on the Manhattan distance measure, we are able to provide a bridge between the two approaches and properly position our results. Second, the TOPSIS ranking based on the Mahalanobis distance measure is the most dissimilar to the RCI, highlighting the fact that the RCI pillars are highly correlated and that regional competitiveness is driven by interrelated factors. Finally, by comparing the TOPSIS rankings obtained, we observe that some regions remain in the same cluster of competitiveness as defined by the RCI across rankings, especially overperforming and underperforming regions, while other regions do not, since they are sensitive to the distance measure used, particularly those with a middle-ranking level of competitiveness. This comparative approach offers a fresh perspective on regional competitiveness that could be useful for policy-makers addressing territorial disparities.

Suggested Citation

  • Filippo Ferrarini & Silvia Muzzioli & Bernard De Baets, 2021. "A TOPSIS analysis of regional competitiveness at European level," Department of Economics 0189, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    • Handle: RePEc:mod:depeco:0189
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