Developing a Framework of Regional Competitiveness Using Macro and Microeconomic Factors and Evaluating Sources of Chang
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ORIGINAL RESEARCH
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 Nirmalkumar Singh Moirangthem1 · Barnali Nag1 Received: 1 June 2020 / Accepted: 30 September 2020 © Global Institute of Flexible Systems Management 2020
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. Keywords Regional competitiveness · Porter diamond model · Malmquist productivity index · Factors of competitiveness · State domestic product · India JEL Classification O41 · O43 · O47
Introduction Growth in prosperity of an economy is determined by its productivity growth, which in turn is said to be an outcome of its competitiveness among other economies. Competitiveness of an economy is defined by a set of institutions, policy and infrastructure that enhances and sustains the prosperity of a nation (World Economic Forum, Schwab and Sala-i-Martin 2014). However, the important question is how do we understand the disparity in competitiveness * Nirmalkumar Singh Moirangthem [email protected] Barnali Nag [email protected] 1
Vinod Gupta School of Management, Indian Institute of Technology Kharagpur, Kharagpur, WB 721302, India
and productivity growth among nations or regions 1 or locals. As the role of sub-nations or regions is becoming important because of their unique characteristics and presence of industrial clusters, the study of determinants of regional productivity and regional competitiveness is becoming essential. Increased importance and capabilities 1
According to Behrens and Thisse (2007), since early days of regional economics, economists use different spatial units of analysis of location, regions, or places interchangea
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