No. 37




Earlier Development and Current State of Estonia’s Competitiveness by Region

04 June 2018


RiTo No. 37, 2018

The article discusses the assessment of the competitiveness of regions, and the simplified methods for performing this activity.

The featured regions are local government units, and more in-depth example analyses have been conducted on five rural municipalities. The article defines five scenarios of competitiveness: dynamic scenario, chaotic scenario, escape scenario, catastrophe scenario, and success scenario.

The article shows that it is possible to categorise local government units by different scenarios, and that this type of systematisation would help to assess the dynamic and the static states in Estonia’s competitiveness. The scenarios can be those described in the article, or slightly different, and they can be five or more; regardless of this, these provide us an excellent framework for assessing what is happening to the competitive position of our regions at the moment.

The presented discussion on competitiveness and the developed scenarios are almost completely based on the estimations of the movement of people into and out of specific regions, and on comparing these to the dynamics of income. Yet, competitiveness is an extremely complex term, and generally a wide variety of factors need to be taken into account when assessing the competitiveness of a region.

At the same time, the competitiveness of a region in the modern world is still mainly linked to the people. Technology is easily accessible, the capital markets are open, and the logistical solutions are working efficiently. Where (to which country) do the factors that offer the greatest added value concentrate in modern economies depends exclusively on the location where the people who develop such solutions concentrate, i.e. where the talent concentrates. This largely determines the competitiveness of the countries, but the competitiveness can be assessed similarly for smaller regions as well.

In light of the above, the article suggests that treating competitiveness in a somewhat simplified way still creates certain content for assessments. In this way, it is possible to assess fairly adequately what is happening in one or another region from the competitive point of view; where does a region take steps forward or backward; and what could be the future outlook of the region.

Assessing the competitiveness of regions holds a great practical significance. If we know the developmental trends of a region, we can also forecast its economic situation in a year or two. The latter in turn provides the basis for developing the necessary economic and political measures.

In order to ensure that the competitiveness of regions can be measured constantly and systematically, this process cannot be too complicated or science-based. This illustrates the convenience of the simplified method for measuring competitiveness discussed in the article.