Competitive regions are rich regions (and vice versa)

According to the World Economic Forum, Competitiveness is how countries create the best economic, social and environmental conditions for economic development.

Let’s see if, in the case of the European Union, this is true.

On the left, the reader can see the map of regional Competitiveness presented by the European Union for 2019 (the greener the more competitive, the more violet the less competitive) and on the right another one showing the Gross Domestic Product per capita in 2018 (latest available). Unfortunately, it is not complete, missing totally or partially pieces of information about France, Ireland, Greece, Slovenia, Poland, the United Kingdom, Hungary and Lithuania. Nevertheless, it is easy to see a surprisingly close correlation between the most competitive regions and those with the highest Gross Domestic Product per inhabitant.

I have decided to complete the analysis with data from some previous years, to make sure that this was not an exception.

On the left, again, the European Competitiveness map per region for 2016, and on the right, the Gross domestic product per capita for 2017. Maps are almost identical.

There can not be much discussion about the idea that higher Competitiveness leads to higher levels of wealth. 

The question then could be: Is Competitiveness the result of a wealthier society or, on the contrary, is wealth the result of a more competitive community? This question could lead to endless discussions. Not necessary, the question is tricky because the formulation is wrong. Competitiveness is just a picture, and pictures are static. Competitiveness is not the source of wealth; the succesful search for Competitiveness is the source of wealth.

Societies who strive for Competitiveness, will: 

  • Let their companies develop quicker and close businesses without facing unnecessary costs
  • Result in people having longer and healthier lives
  • Export their produces and services without time waste and cheaper
  • Provide their students higher and better level of knowledge
  • …  

And many more that will produce more wealth which, when reinvested in search of better Competitiveness, will push the parameters even further and create more wealth. It is a fascinating virtuous cycle.

The opposite is also exact for those countries, regions, cities, and companies not interested in growing Competitiveness or not understanding what this means. They will enter a vicious cycle of loss of capital, resources and people. These societies will not be able to provide the substantial growth needed for their population or employees. 

The result is self-evident in the following map.

Non competitive areas get empty while people flow to competitive ones

In the European Union, with meagre fertility rates and free movement of citizens among countries, those most competitive societies attract population while the less competitive lose it.  

The reason behind these movements is plain: citizens (in general those young and well prepared), move there where they believe that they can have a better life. 

At the view of data, politicians, and their voters equally, need to decide what they want for the future of their country and act accordingly.

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