Evaluation of Competitiveness in the European Union: Alternative Perspectives

• Published in: Procedia economics and finance 2014, Vol.12, p.575-581
• Main Authors: Rozmahel, Petr, Grochová, Ladislava Issever, Litzman, Marek
• Format: Article
• Language: English
• Subjects: cluster analysis; Competitiveness; convergence; European Union
• ISSN: 2212-5671; 2212-5671
• DOI: 10.1016/S2212-5671(14)00381-5

The paper deals with different approaches to evaluation of competitiveness of the EU countries. Alternative measures of competitiveness indicators are applied and compared in the paper. The traditional approach of cost-based productivity measures is applied in the analysis. In addition, the set of infrastructure and human capital quality indices reflecting the country's potential to attract firms to establish and conduct competitive high-tech business is suggested to examine competiveness from the firm-level perspective. Internally homogenous clusters of EU countries with similar competitiveness characteristics are identified using the Ward agglomerative method in the analysis. Also, the dynamics and convergence processes of the EU core, periphery and CEE countries are examined using the measure of average distances within clusters. The results of countries’ competitiveness evaluation show differences using both alternative approaches. Whereas the division between core, periphery and CEE countries is obvious using traditional cost-base productivity measures, unstable disparate clustering structures were identified using the firm-level approach. The results also show slow and steady convergence of CEE towards the core countries from the perspective of infrastructure and human capital quality dimension.