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Introduction

The Regional Competitiveness Indicators produced by the Department of Trade & Industry represent a valuable contribution towards the on-going debate about area competitiveness (see the Research Monitor Regional Competitiveness Indicators). However, whilst the DTI's work seeks to assess competitiveness through a balanced picture comprising a wide range of appropriate indicators, each measure is treated in isolation and there has been no move towards producing an overall composite index which measures the actual comparative performance of areas. An attempt to fill this gap has been made by Robert Huggins of the Centre for Advanced Studies at Cardiff University in a report sponsored by the government's Economic and Social Research Council. [Robert Huggins - "An Index of Competitiveness in the UK", Centre for Advanced Studies, Cardiff University].

A UK Competitiveness Index

The Study analyses the economic competitiveness of regions by constructing a single index combining gross domestic product per head, average earnings, number of businesses per head, number of knowledge-based businesses, economic activity and unemployment. Each of these six key indicators or drivers of competitiveness is weighted to reflect its "value" and contribution towards performance in terms of economic inputs and outcomes. The final result was an Index of Competitiveness (Table 1).

The Index clearly highlights the continuance of a north-south divide. The North West is ranked in an unassuming 8th position, the same as its position on a simple GDP per head basis, though its Competitiveness Index, at 94.5% of the UK average is somewhat higher than that implied using the GDP per head measure alone. London and the South East are the top ranked regions and are, according to Mr. Huggins, performing as well as the world's 10 most competitive nations, such as Singapore, Switzerland and Denmark. Southern England is driving growth. At the lower end of the scale, Wales, North East England and Yorkshire and the Humber are ranked alongside countries such as Hungary, Chile and Israel.

A Knowledge-Based Business Index

Many sources, including research undertaken for the Government's Competitiveness White Paper, have highlighted the crucial factor in economic competitiveness, particularly in terms of future prospects as opposed to inherited advantages, as the existence of knowledge-based businesses such as high tech manufacturing and knowledge-based services such as IT, computer technology and telecommunications, financial and business services, media and broadcasting. A separate index based on the distribution of such key knowledge-based businesses across the UK was therefore also prepared (Table 2). This too illustrates a massive differential between the North and South of the UK which is even wider than that implied by the overall competitiveness index. Outside of southern England, the North West is top of the "Second Division" though it still had 16.4% less than the average proportion of knowledge-based businesses.

Local Competitiveness

As well as examining the UK regions, the report extends its analysis to an Index of Local Competitiveness to identify the specific parts of regions that are driving growth. Alongside the inner areas of west London, the chief concentrations of competitive areas are found around the eastern end of the M4 corridor and the wider Thames Valley area. In terms of the Knowledge-Based Business Index the analysis highlights the adjacent localities of Bracknell and Wokingham as having the strongest concentration of knowledge intensive businesses in the UK, with more than double the national average.

Within the North West Region, only two areas - Warrington and Cheshire County appear in the index as having competitive advantages above the UK average. Lancashire County itself, with an index of 94.0, ranks in a lower middle position of 80th and assumes and even lower ranking under the Knowledge-Based Business Index (Table 3).

For further details, please contact:
Peter Kivell
Tel 01772 534157
Email Peter.Kivell@lancashire.gov.uk