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Journal of Economic Geography 5 (2005) pp.

285304
Advance Access originally published online on 13 April 2005 doi:10.1093/jeg/lbh063
Everyones a winner: problematising the
discourse of regional competitiveness
Gillian Bristow*
Abstract
Sincetheearly1990s, theconcept of regional competitivenesshasbecomea
hegemonic discourse within public policy circles in developed countries.
However, it is a somewhat chaotic and ill-dened discourse based on a
relatively narrow conception of how regions compete, prosper and grow.
This paper seeks to problematise the discourse with reference to theory,
and to explain how and why it has assumed such signicance in policy
circles. It is argued that the answer lies within the policy process and the
imperative of legitimating certain courses of policy action.
Keywords: competitiveness discourse, Porter, spatial competition, regional competitiveness
indicators
JEL classification: R10, R12, R30, R58
Date submitted: 5 December 2003 Date accepted: 1 July 2004
1. Introduction: the regional competitiveness hegemony
Since the 1990s, in response to the work of authors such as Michael Porter (1990), the
concept of regional competitiveness has become a hegemonic discourse (Schoenberger,
1998) within public policy circles indevelopedcountries. Indeed, regional competitiveness
has been enthusiastically adopted as a policy goal by the European Commission and by
national governments across Europe and North America (ACOA, 1996; De Vol, 1999;
Commission of the European Communities, 2000). It has risen to particular prominence
in the UK where the national government has explicitly tasked Regional Development
Agencies (RDAs) with the responsibility for making their regions more competitive and
akin to benchmark competitive places such as Silicon Valley (DETR, 1999; House of
Commons, 2000; HM Treasury, 2001a). The competitiveness hegemony is such that
according to certain analysts, the critical issue for regional economic development
practitioners to grasp is that the creation of competitive advantage is the most
important activity they can pursue (Barclays, 2002, 10).
Current policy documents extolling the language of competitiveness tend to present it
as an entirely unproblematic term and, moreover, as an unambiguously benecial
attribute of an economy. Competitiveness is portrayed as the means by which
regional economies are externally validated in an era of globalisation, such that there
can be no principled objection to policies and strategies deemed to be competitiveness-
enhancing, whatever their indirect consequences. For example, the European
* School of City and Regional Planning, Cardiff University, Glamorgan Building, King Edward VII Avenue,
Cardiff CF10 3WA, UK.
email <Bristowg1@cardiff.ac.uk>
#
The Author (2005). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oupjournals.org

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Commission (2004, viii) states that strengthening regional competitiveness throughout
the Union and helping people full their capabilities will boost the growth potential of the
EUeconomy as a whole to the common benet of all. Similarly, the UKgovernment sees
its regional policy objective as being one of widening the circle of winners in all regions
and communities (DTI, 2001, 4), a sentiment clearly absorbed by the devolved
administration in Wales which has entitled its National Economic Development
Strategy, A Winning Wales (Welsh Assembly Government, 2002).
The emergence of regional competitiveness as a discrete and important policy goal has
spawned the development of indicators by which policy-makers and practitioners can
measure, analyse and compare relative competitive performance, or nd out who is
winning. Various attempts have been made to measure and model competitiveness
for European regions (e.g. IFO, 1990; Pompili, 1994; Pinelli et al., 1998; Gardiner,
2003). Furthermore, the European Commission has placed the analysis of regional
competitiveness at the heart of its ongoing assessment of regional economic
performance (Commission, 1999; 2000). In the UK, the Department of Trade and
Industry (DTI) has published sets of regional competitiveness indicators since 1995
(e.g. DTI, 2003, 2004). More recently, efforts have also been made to develop
composite indices of regional competitiveness, following similar trends in the
evolution of national competitiveness indicators (e.g. World Economic Forum, 2003;
see Lall, 2001). These combine relevant indicators into one overarching measure, the
results of which can be reported in the form of a league table (Huggins, 2000; 2003).
This preoccupation with competitiveness and the predilection for its measurement is
premised on certain pervasive beliefs, most notably that globalisation has created a world
of intense competition between regions (Raco, 2002). However, there is some confusionas
to what the concept actually means and how it can be effectively operationalised. Indeed,
in a manner cognate with debates surrounding clusters (see Martin and Sunley, 2003),
policy acceptance of the existence and importance of regional competitiveness and its
measurement appears to have run ahead of a number of fundamental theoretical and
empirical questions. The purpose of this paper is to problematise the dominant policy
discourse around regional competitiveness with reference to theory, to explore how and
why a discourse with ostensibly thin and ill-dened content has assumed such signicance
in policy circles, and to consider the potential policy consequences. It is argued that the
answer lies within the political economy of economic policy and the rhetorical power and
usefulness of the prevailing competitiveness discourse. The paper begins by examining the
polysemous yet overlapping meanings of regional competitiveness in academic debates.
2. The discourse of regional competitiveness
2.1 Competitiveness as microeconomic productivity
Competitiveness is usually used to refer to rm performance. The discourse of rm
competitiveness comes from two principal sources. The rst of these is the discourse
of the economics profession, where competitiveness is regarded as a somewhat
abstract quality conferred upon successful rms by the markets within which they
operate. Thus, the market is the impartial and ultimate arbiter of right behaviour in
the economy and competitiveness simply describes the result of responding correctly to
market signals (Schoenberger, 1998, 3). The fusion of economics with evolutionary
theory has imbued the concept with the notion of survival of the ttest. Firms, like
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organisms, are seen as living on the edge, with survivors being those who are able to
survive or win in a dynamic world of economic competition (Sheppard, 2000).
Competitiveness has thus become inescapably associated with ideas of tness and
untness, and these in turn with the implied premise of merit, as in deserving to live
and deserving to die. Secondly, competitiveness is also the discourse of the business
community where it represents the fundamental external validation of a rms ability to
survive, compete and growin markets subject to international competition. This provides
a pervasive and powerful means of explaining almost any behaviour i.e. a rmmust do X
in order to be competitive (Schoenberger, 1998).
Thus, at the micro (i.e. rm) level, competitiveness has a relatively clear meaning and
refers to the capacity of a rm to compete, grow and be protable in the marketplace.
In principle at least, relative rm competitiveness can also be measured on a common
scale. This is because it refers to commensurable units (rms) engaged in commensurable
activities (competing in a market). Since it is perceived to reect a rms ability to survive
competition and to grow, rm competitiveness is generally conceived of in terms
of output-related performance indicators. Indeed, according to Michael Porter (1985,
1990) rm competitiveness is simply a proxy for productivity. Porter has argued
that rms that are capable of producing more output with fewer units of input than
their rivals generate a competitive advantage in the markets in which they compete,
enabling them to grow and prosper accordingly. A rms productivity, he argues,
is dependent upon its entrepreneurialism. This is dened as its capacity to innovate
in the production process, to access new and distinctive markets in different and
unconventional ways, and to produce new or redesigned goods and services with
perceived customer benet (see also, Spender, 1998). Thus according to Porter, rm
competitiveness is not simply centred on a narrow efciency-based conception of pro-
ductivity, but also depends on the value of products and services produced i.e. their
uniqueness and quality.
Porter has extended and applied his model of the competitive advantage of rms to the
competitive advantage of regions, nations, and places or locations generally (see, for
example, Porter, 1995; 1998). Along with other prominent commentators such as Robert
Reich and Lester Thurow, Porter has made a powerful contribution to the sedimentation
of the idea that places are equivalent to corporations, competing for market share within
an increasingly interconnected and ercely competitive global economy. The idea of place
competitiveness is thus a direct antecedent of globalisation discourse in that it asserts that
the structural properties of the global economy have drastically changed. Indeed, the
work of Porter evolved alongside the increasing use of the idea of competitiveness in
political discussions regarding the dilemmas facing the American economy in the context
of the breakdown of the post-war settlement and the rise of the neo-liberal political
economy (see Krugman, 1996a, 1996b).
Porter has argued that whilst it is rms that compete, it is governments that create the
market conditions to allow rms to exploit each economys inherent competitive
advantage. In so doing, he has played an important role in propounding a micro-
economic, productivity and output-related conceptualisation of regional competitive-
ness. Indeed, according to Porter, regional competitiveness and productivity are
equivalent terms:
A regions standard of living (wealth) is determined by the productivity with which it uses its
human, capital, and natural resources. The appropriate definition of competitiveness is
productivity (Porter, 2002, 3).
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Porter asserts that the productivity of a region (and indeed any territorial entity) is
ultimately set by the productivity of its rms, whether they are domestic rms or
subsidiaries of foreign companies. Furthermore, he makes a clear connection between
productivity and regional living standards by arguing that productivity has a major
inuence on the cost of living, the cost of doing business and the level of wages in a
region. He falls short, however, of asserting that regional competitiveness and regional
prosperity are equivalent notions.
Regional productivity, he argues, is dependent on two interrelated sets of variables, the
rst of which concerns both the value of goods and services and the efciency with which
they are produced by rmstheir competitive advantage. However, he contends that
productivity is also determined by the quality of the microeconomic business
environment:
More sophisticated company strategies require more highly skilled people, better information,
improved infrastructure, better suppliers, more advanced research institutions, and stronger
competitive pressures, among other things (Porter, 2003, 25).
He identies four sets of factors as critical elements of the microeconomic business
environment i.e. demand conditions; factor (input) conditions; the context for rm
strategy and rivalry; and related and supporting industries. He asserts that the
region plays a critical role in shaping the competitiveness of rms through the role
that geographical proximity and clustering play in rm-level innovation. The
international competitiveness of a rm is perceived to be a function of both the
spatial concentration of rms in the region, and the degree of integration between
rms and their territory i.e. through their relationships with specialist suppliers,
business services and research and educational institutions (see also Cappellin, 1998).
Porter has successfully branded, transformedandexportedhis diagnosis of howregions
may improve their competitiveness to development agencies and governments all over the
world.
1
This seminal thesis has also provided one of the main propellants for New
Regionalism, which has become something of an orthodoxy in policy-related regional
development studies. As Webb and Collis (2000, 858) explain, the starting point for New
Regionalists is almost always the concept of regional competitiveness. This school of
thought embodies two principal beliefs. The rst is the historico-empirical claim that in
the context of globalisation, the region has become the crucible of economic
development and wealth creation. The second is the normative doctrine that the
region should be the prime focus of economic policy (Lovering, 1999). Using insights
gained from endogenous growth theory, institutional economics and cognitive
psychology, proponents of New Regionalism assert that the critical propellants of
competitive advantage in a global economy lie increasingly in facets of the regional
business environmentknowledge, relationships and motivationthat distant rivals
cannot imitate or match (Storper, 1997; Porter, 1998). The inuence of the discourse
of globalisation is thus clearly apparent.
2.2 Competitiveness as regional macroeconomic performance
Abroader, yet overlapping denitionof regional competitiveness has also emerged within
the regional development literature, which has both macroeconomic (economy level) and
1 See Institute for Strategy and Competitiveness website at Harvard Business School for examples of
Porterian competitiveness analyses: http://www.isc.hbs.edu/econ-natlcomp.htm.
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microeconomic (rm level) connotations. One of the principal proponents of this
conceptualisation is Michael Storper who denes regional competitiveness as:
the capability of a region to attract and keep firms with stable or increasing market shares in an
activity, while maintaining stable or increasing standards of living for those who participate in it
(Storper, 1997, 264).
This denition has quickly gained widespread academic acceptance and use,
particularly amongst New Regionalists (see, Maskell and Malmberg, 1999; Malecki,
2002; Huggins, 2003). Whilst this denition differs from that used by Porter, it derives
from the same discourse of rm-based, output-related competition. This denition is in
fact a direct application of a denition of national competitiveness rst developed in
the United States by Scott and Lodge (1985), then adopted by the OECD (OECD, 1992)
and used by several national governments, including successive UK Conservative
governments in the 1990s (HMSO, 1994, 1995, 1996). It thus emanates from the same
global competitiveness agenda powerfully promoted by Porter and others, but is more
directly shaped by national and international policy discourses.
This conceptualisation views regional competitiveness as a combination of the
competitiveness of a regions rms (dened in terms of their external validation
through growth in market share), and a regions overall economic performance (or
validation through sustained or improved levels of comparative prosperity). Whilst it
therefore also conceives of competitiveness in output-related terms, it is subtly distinct
from Porters denition in that it asserts that regional competitiveness and regional
prosperity are in fact interdependent notions, if not directly equivalent. This assertion,
and the denitions avoidance of equating regional competitiveness with productivity,
are deliberate, as is explained by Huggins (2003, 89):
Although low labour costs may initially contribute to the attraction of business investment to an
area, such costs are in many ways a double-edged sword, resulting in employees working for
lower wages than their counterparts in other localities and regions. Therefore, it can be argued
that true local and regional competitiveness occurs only when sustainable growth is achieved at
labour rates that enhance overall standards of living.
To put it another way, microeconomic productivity is considered to be a necessary but
not sufcient condition for nancial returns, increased market share or, ultimately,
improved macroeconomic performance (Reinert, 1995). A region is competitive,
according to this view, when it has the conditions to enable it to raise its standard of
living, or the ability to sustain winning outcomes. These conditions are perceived to
include a mixture of Porterian competitive advantage for rms and the attractiveness of
the regional environment for business, as well as the volume and rate at which the regions
human capital is employed.
2.3 The policy discourse of regional competitiveness
This discussion illustrates that regional competitiveness lacks a clear, unequivocal and
agreed meaning within the academic literature. It is perhaps not surprising therefore that
the policy discourse around regional competitiveness is somewhat confused.
Policy-makers have tended to favour the macroeconomic denition of competitiveness
which equates it with regional prosperity. Thus, for example, the UK government states
that regional competitiveness describes the ability of regions to generate high income
and employment levels while remaining exposed to domestic and international competi-
tion (DTI, 2003, 3), a denition also utilised by the European Commission (Commission,
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1999, 75). Policy-makers also appear strongly persuaded of factors endogenous to
the regions microeconomic business environment in shaping rm competitiveness.
The European Commission (2004) asserts that developing regional competitiveness
depends on . . . encouraging the development of knowledge-based economic activities
and innovation (p. 3), and observes that there is a growing consensus about the
importance for regional competitiveness of good governancein the sense of efcient
institutions, productive relationships between the various actors involved in the devel-
opment process and positive attitudes towards business and enterprise (p. xiii). Similarly,
in 2001 the UK Government announced that it was introducing a new approach to
regional policy which was intended to strengthen the capability of regions to build on
their own competitive advantages by boosting regional capacity for innovation, enter-
prise and skills development (DTI, 2001, 4). Furthermore, all existing attempts to dene
and measure regional competitiveness in the UK and EU incorporate indicators of the
quality of the business environment, business density and clustering, and/or knowledge
intensity and innovation, albeit in different combinations (see, for example, DTI, 2003;
Huggins, 2003).
To confuse matters, regional productivity has also begun to assert itself in the policy
lexicon. In the UK, the Treasury has identied productivity as the key driver of UK
competitiveness and higher living standards (HM Treasury, 2001b). Moreover, it has
asserted that differences in regional income levels (as measured by GDP per capita) are a
function of variations in regional productivity (GDP per worker) and the employment
rate (HMTreasury, 2001a). However, the DTI is more equivocal in its approach and shies
away from identifying explicit causal relationships between productivity and regional
living standards. Instead, it publishes a series of different indicators of inter alia regional
prosperity, productivity, infrastructure and labour market performance which are
deemed to represent a balanced picture of all the statistical information relevant to
regional competitiveness (DTI, 2003; p. 3). No explanation is provided as to how, or
to what extent, the various indicators relate to the overall denition of regional
competitiveness.
This reveals the existence of considerable confusion within policy circles as to whether a
regions competitiveness is simply reected in its overall levels of prosperity, or whether
the conditions shaping the regions ability to sustain its macroeconomic performance are
more or less important considerations. Some consultants keen to produce benchmark
indices of regional competitiveness have taken the more pragmatic option of asserting
that the conditions shaping competitiveness and overall competitiveness outcomes
are interdependent and thus are not mutually exclusive. Most notably, Huggins has
developed a methodology for constructing a composite index of regional competitiveness
which has been appliedto UKregions (Huggins, 2000; Cooke et al., 2001; Huggins, 2003),
as well as to UK cities, metropolitan boroughs and urban wards (Robert Huggins
Associates, 2002). The index is constructed using a three-factor framework based
upon inputs, output and outcomes. The key input factors are business density, the pro-
portion of knowledge-based businesses as a proportion of total businesses, and economic
activity rates. These variables are conceptualised as contributing to the output-produc-
tivity of a region, measured by GDP per capita. Finally, the impact or outcome of these
different factors is measured with reference to the level of average earnings and the
proportion of individuals who are unemployed. Each of these three elements (i.e. inputs,
outputs and outcomes) is given equal weighting in calculating the overall index, since it
is hypothesised that each will be interrelated and economically bound by the other
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(Huggins, 2003, 92). There appears tobe notheoretical basis or indeedjusticationfor this
judgement.
Thus whilst the notion of regional competitiveness is rmly ensconced in, and clearly
shaping the broad direction of, regional economic development policy, it is a rather
chaotic discourse. There are some dominant axioms which collectively dene the
discourse, notably that regional competitiveness is a rm-based, output-related
conception, strongly shaped by the microeconomic business environment. However,
regional competitiveness itself can be dened in different ways such that it is not
entirely clear when a situation of competitiveness has been achieved. Moreover, there
is considerable confusion as to what concrete activities constitute competitiveness and
how micro-level competitiveness translates into macro-level prosperity. Insofar as the
academic thinking on regional competitiveness is clearly driven by (and conated with)
the discourses of globalisation and the knowledge economy, the regional competitiveness
discourse appears to exemplify a wider tendency towards theory led by policy (see
Lovering, 1999, 2001). In this case it appears that as a result, its content is thin and
ill-dened. The next section of this paper aims to problematise the existing discourse and
its deciencies with reference to theory.
3. Problematising regional competitiveness: critical questions
This section of the paper focuses on providing a critique of key elements of the regional
competitiveness discourse. It is argued that the discourse which has become so rmly
ensconced in regional policy agendas is based on relatively thinly developed and narrow
conceptions of howregions compete, prosper and growin economic terms. The argument
focuses on three core, inter-related strands of the regional competitiveness discoursethe
importance of the region to rm competitiveness, the role of rm competitiveness in
generating regional prosperity, and the broader modalities of regional competition
and strategic competitive behaviour. It is argued that as a result, the prevailing
approach to regional economic development policy has serious limitations.
The discourse of regional competitiveness lacks clarity as to the precise signicance of
different determinants of rmcompetitiveness. In fact, there has been a tendency to assert
that the myriad of determinants of rmcompetitiveness uncovered by theoretically driven
efforts to comprehend it are of equal importance in all spatial and locational contexts.
Thus, Malecki (2002, 941) observes all of the issues that have risen to the top of the
researchagenda over the past 30 years are relevantindeed, essential. . .Having only some
of these conditions in good order is not enough. Similarly, Deas and Giordano (2001)
assert that the competitiveness literature has tended to proffer a generalised checklist of
relevant determinants of rm competitiveness and that further empirical research is
required to test the relative importance of factors deemed to generate competitive
advantage for internationally successful rms.
The literature is strong in its assertion that the key ingredients shaping rm com-
petitiveness are predominantly endogenous to the region and reside in the institutional
environment. Amin and Thrift (1994) have argued that institutional thickness is the
secret ingredient found in successful places and absent in others. By this is meant a
complex of strong, viable and interacting institutions (both formal and informal) that
share a sense of common enterprise. To this list may also be added a whole host of other
qualitative or soft location factors which may create a favourable environment for
the development of local rms. These include, the local entrepreneurial culture, the
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availability of specialised suppliers, forms of bank-industry relations, forms of labour-
management relations, the quality of the local living or social environment, the cultural
resources of a region, and the regional identity and international image (Cappellin, 1998).
However, the literature is somewhat vague as to the precise signicance of the regions
inuence. By way of illustration, in a paper asserting the role of the region (territory) in
shaping rm competitiveness, Camagni (2002) asserts that the companies and entre-
preneurs that compete in international markets are to a large extent generated by the
local context (p. 2396). One might ask what exactly constitutes a large extent and
whether this necessarily holds for all rms in all regions. Gardiner (2003, 20) argues
for case studies of successful regions to assess the importance of more qualitative factors,
e.g. regional governance, and the ability to transfer the factors driving success to those
areas which are currently less competitive.
Indeed, there are various grounds for questioning both the universality and strength of
the region-rm competitiveness nexus. In some instances the competitiveness of rms in
the region might be altogether disconnectedfromthe region. This is certainly the case with
multinational enterprises (MNEs), the competitiveness of which might reect conditions
in the parent country as much as the host one. For example, Phelps et al. (2003) have
shown that it is factors internal to major MNEs (such as expertise, the existence of spare
capacity and plant size) that drive the re-investment process in regions rather than local or
regional factors. Even non-MNE rms nd themselves increasingly locked into, and
therefore shaped by, the international networks in which they increasingly participate
(Tracey and Clark, 2003). This reects both the imperative to nd partners with the best
t in relation to the kinds of product they develop and the markets in which they
compete, as well as the permissive factor of advanced transport and communications
systems. Similarly, Malecki (2002) has drawn attention to the potential importance of
global networks as sources of knowledge in shaping rm competitiveness in an area.
However, he acknowledges that just how and where these connections are madeand by
whomis rarely identied except anecdotally, thus highlighting an area where there is a
clear need for further empirical research.
There is an emerging body of empirical research into rminnovation which, as has been
indicated above, is viewed as central to regional competitiveness. This research suggests
that factors internal to the rm may be as important, if not more important, than factors
endogenous to the region in shaping innovative behaviour. In a study of the innovation
activities of SMEs in 10 European regions, for example, Sternberg and Arndt (2001) have
found that rm-level factors (including, inter alia, market position, organisational status,
staff competencies and nancial resources) have a greater overall inuence on innovation
activity than most regional-level determinants. Todtling and Kaufman (2001) have also
found that much small rm innovation in European regions tends to take place within
vertical networks that are dominated by large corporations.
Neither is it necessarily the case that the region is the spatial scale inuencing
competitive advantage. New Regionalism has come under increasing attack for its
tendency to take the fundamental concept of the region for granted thereby
displaying a kind of spatial fetishism that tends to elide intra-regional divisions and
tensions (MacKinnon et al., 2002). Similarly, Lovering (1999) observes that it is not
always clear how the abstract notion of the region used in competitiveness discourse
relates to the actual regions in which people and rms reside and, to the spatial
delimitations which may inuence competitive advantage. Some authors have argued
that the spatial specicities that provide the impetus for economic development and rm
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competitiveness may exist at the local (e.g. city) rather than the regional scale (see, for
example, Hamilton, 1991; Healey and Dunham, 1994; Begg, 1999; Kresl and Singh, 1999;
Waters and Lawton Smith, 2002).
This is not to say that the region and localisation economies are irrelevant to the
performance of rms. Rather the argument here is that their signicance tends to be
overstated in the regional competitiveness discourse. In practice, the regions inuence
may vary depending on the particular industrial structure and context, the balance of
globally- and locally-orientated rms, and the degree to which the region constitutes an
internally cohesive, homogenous economic space. The critical point is that the nature and
signicance of this contingency is barely acknowledged in the regional competitiveness
discourse. There is thus an inherent paradox here in that whilst the discourse emphasises
the importance of factors endogenous to the region in shaping rm performance, the key
ingredients for success are uniformly prescribed making for a one-size ts all approachto
regional economic development policy. The result is that policy-makers and economic
development practitioners across very different regions end up pursuing identikit
competitiveness strategies based upon improving regional institutional thickness, with
no clear prioritisation or tailoring of the dominant prescriptions to suit local
circumstances.
The regional competitiveness discourse is also characterised by the belief that regional
economic performance and prosperity is ultimately derived from and thus is reducible to
the competitiveness of rms in the region. In so doing, it displays a narrow focus on the
rm and on growth in a region rather than the development of a region (see Markusen,
1994; also Perrons, 2004). Thus, even if the rationale for creating a supportive
microeconomic business environment for the development of productive rms is
accepted, the importance of this for the improvement of regional living standards is
much less clearly defensible. Indeed, Porters thesis has been criticised for its general
failure to perfectly reconcile the micro-level analysis of the competitive advantage of rms
with the macro-level analysis of development prosperity (Grant, 1991). Porter simply
presumes some invisible hand whereby the pursuit of competitive advantage by rms
translates into increasing productivity and prosperity. As Martin and Sunley (2003, 15)
observe, equating competitiveness with productivity is to invite tautology and
ontological confusion: is a region more competitive because it is more productive, or
is it more productive because it is more competitive?
There are a number of difculties in asserting that simply having a stock of more
productive rms necessarily makes a region more prosperous. Firstly, the direction of
causation between productivity and regional prosperity is itself problematic. Higher
standards of living in a region may attract investment from more productive rms
over the longer run, or change the structure of economic activity (see e.g. Commission
of the European Communities, 1999). Thus income growth may propel productivity
improvement as well as the other way around.
Secondly, the links between rm competitiveness and regional prosperity may also be
highly contingent upon the character and stock of rms and industries in a region, a fact
largely ignored in competitiveness discourses. Regional productivity is clearly an average
of a regions different economic activities, andwill therefore reect its particular industrial
structure and pattern of specialisation (Markusen, 1994). High productivity rms and
sectors may well sit cheek by jowl with low productivity activities. Reinart (1995) also
argues that high relative or absolute productivity does not necessarily lead to a higher
standardof livingbeing the most efcient in the wrong (i.e. lowvalue-added) activities,
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for example, leads to low standards of living. This suggests that it is a regions ability to
enjoy rapid changes in the level of relative productivity that is more signicant in terms of
regional prosperity than absolute or relative regional productivity levels per se (see also
Camagni, 2002). As already indicated, a number of analyses suggest that economic
activity and employment rates also play an important role in determining a regions
overall living standards (e.g. Pinelli et al., 1998; HM Treasury, 2001a). These are
likely to be determined by a whole host of economic, social, cultural and political
factors and not simply by factors conducive to rm competitiveness.
Afurther, related problemarising fromthis narrowfocus on the rmin the region is the
tendency to ignore the constitutive outside inuences, social relations and networks
shaping regions and their development processes. A number of authors have argued
that regions should be conceived as open, discontinuous spaces of ows constituted
by a variety of social relationships (see, for example, Doel and Hubbard, 2002). This
relational perspective sees patterns of regional development and prosperity as reecting
relations of power and control over space, where core regions tend to occupy dominant
positions and peripheral regions play marginal roles within wider structures of
accumulation and regulation (Cumbers et al., 2003). In this regard, each regional
economy is in a distinct position since each is a unique mix of relations over which
there is some power and control and other relations within which the place may be in
a position of subordination (Massey, 2004). This perspective posits that certain regions,
such as the South East of England, are likely to develop a hegemonic political and
economic position which not only shapes their own development, but impacts upon
the development processes of other regions.
Similarly, the regional competitiveness discourse ignores the role of national andglobal
forces shaping regions and their development. As Lovering (1999, 2001) observes, there
are problems in asserting that improving the international competitiveness of rms in a
region has a necessary or logical impact on regional economic welfare. The latter depends
not only upon regional averages in productivity but also on distributional questions,
which may or may not be improved by the globally-oriented rms in a territory raising
their market shares. Thus, macroeconomic regulation and the prevailing welfare regime
may also profoundly shape regional development pathways, their degree of inclusivity
and ultimately, regional standards of living (Perrons, 2004).
Taking a broader perspective on regional development processes again highlights the
limits of policy approaches predicated upon the dominant regional competitiveness
discourse. Adopting the relational perspective would imply that the problems of less
prosperous or weaker regions may be explained by their relationships with
prosperous, core regions rather than simply reecting deciencies in the performance
of their rms or the environments within which they operate. However, the
competitiveness discourse eschews consideration of the relations between regions,
focusing only on the imperative of building capacity within regions. The responsibility
for developing competitive rms and prosperous regions is thus placed rmly with
institutional actors and communities within regions, who are therefore also seen as
culpable where competitive performance is seen to have slipped. Competitiveness
league tables are inevitably seductive for regional development agencies and the media
keen to absorb quick and dirty comparative measures of regional economic
performance. However, they clearly carry the inherent danger of stigmatising lagging
regions as failing because of their own deciencies, when the problems may lie in
part in broader structures. The policy consequences are also clear. The result is an
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overarching focus on building institutional structures such as RDAs, to the neglect of
a more active interregional policy that might aim to both redistribute resources
between regions and control growth in the core with equal if not greater impact (see
Cumbers et al., 2003).
The dominant discourse also leads to an emphasis upon a relatively narrow route to
regional prosperity, ignoring the potential for growth and development to be achieved
through more diverse avenues. The regional competitiveness discourse ignores the
possibility that regional prosperity might be achieved by, for example, the development
of rms serving local and national markets and not just international ones, or by the
development of community or social enterprises which meet broader social and environ-
mental as well as economic objectives. As a consequence, policies tend to prioritise rather
narrow, private-sector orientated agendas at the expense of broader regeneration
initiatives, a criticism recently levelled at the English RDAs (Niven, 2004).
Indeed, the discourse on regional competitiveness fails to address the question
of sustainability or the possibility that the outcomes of relying on a strategy based
upon internationally competitive rms may not necessarily be desirable. The modern
socioeconomic system has to achieve not only a sustainable balance of payments or
absolute level of income performance, but also a number of other basic social objectives,
notably some degree of income redistribution and at least a basic level of health care
(Llewellyn, 1996). If these are not met, then over the longer term the situation would
almost certainly not be sustainable. If the aim is to increase average earnings in the long-
term, for example, it is only logical that improving competitiveness should involve alle-
viating povertypersistent poverty will hold back efforts to enhance competitiveness
(Hirmis, 2002). The current discourse of regional competitiveness does not, however,
exhibit any concern with the structure, beneciaries and durability of improved rm
competitiveness.
Finally, the prevailing regional competitiveness discourse is output-related and as a
result, it pays little or no attention to the broader non-tradeable modalities of competitive
behaviour which may characterise regions. The regional economic development literature
is littered with examples of egregious strategic competitive behaviour and spatial
contests for the attraction of important inputs. Regions, or more specically their
institutions and jurisdictions, compete in ever more sophisticated and complex ways
for a number of economic inputs, including domestic and foreign direct investment
(Parsley, 1997; Tewdwr-Jones and Phelps, 2000), highly skilled labour (Rohr-Zanker,
2001), internet exchange points (Malecki, 2002) and shares of nite government resources
(Morgan, 2001). Inasmuch as this competition occurs for factors which help shape the
development and sustenance of a business environment conducive to competitive rms,
there are clear connections with Porterian and New Regionalist thinking. Nevertheless,
these broader notions of competitive strategy or behaviour do not feature prominently
in the policy and practice discourses of regional competitiveness. Thus, for example, none
of the measures of competitiveness developed in the EU and UK attempt to measure
competition for resources through, for example, detailed audits of institutional behaviour
and resource allocation decisions.
This is a signicant omission. Several authors observe that the position of regions in
global networks can change for the better as a result of this competitive behaviour. For
example, Lall (2001) has argued that where free markets cannot allocate resources
optimally, places can improve their economic performance by intervening to remedy
(or exploit) market failures. Similarly, Justman et al. (2002) provide evidence which
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indicates that particular competitive strategies, such as seeking to attract investment by
differentiating the quality of infrastructure rather than by simply offering inated subsidy
packages, can lead to regional economic gains. Others observe that this sort of regional
competition is often spurred by the individualistic self-interest of places and their
institutions and tends as a consequence to result in aggressive and injurious local
rivalries (Morgan, 2001; Doel and Hubbard, 2002; Basolo, 2003). The critical point is
that the links between this type of competitiveness and improved regional economic
performance are highly contingent upon a number of localised variables relating to
both the private and public sectors which are not acknowledged in the dominant
competitiveness discourse.
The output-related focus of the prevailing discourse also means that regions are
conceived as independent, collective entities competing in directly commensurable
terms in a manner directly equivalent to rms. Regions are treated as clearly dened,
internally coherent, atomistic and bounded spatial entities with quantiable attributes
that are in their exclusive possession, for each of which a desirable competitive advantage
can be identied. Thus, competition is conceived of as occurring among places that begin
competing on a level playing eld, with fortune favouring the entrepreneurial (Sheppard,
2000).
What is missing is any effort to conceptualise regions as territorially dened social
aggregations, with very different economic and political structures (Lovering, 1999).
If regions do not compete on a level playing eld, then appropriate comparisons
become difcult. Sheppard (2000) identies at least three dimensions of difference,
each of which tilts the playing eld to favour some places over others. First, each
region is embedded in a set of national and regional regulatory systems, institutions
and norms. Secondly, each region occupies a unique geographical trajectory as a
consequence of its historical role and location within the broader evolving political
and economic system. This creates differences in industrial structures, levels of
economic development and maturity, as well as differences in the ability of regions to
respond to economic and political restructuring. And thirdly, higher levels of the state
frequently exercise political favouritism, either deliberately through spatially targeted
policies or as the unintentional result of national policies with different local impacts.
More empirical research is needed to understand and identify the conditions which
enable some regions to adapt successfully, whilst others remain locked-in to a fatal
development path (MacKinnon et al., 2002). However, comparing the economic
performance of regions without taking these differences into account is clearly proble-
matic. All existing measures of regional competitiveness, particularly those which develop
composite rankings, fall into the trap of trying to make comparisons across very different
but notionally similar regional entities, without exploring the extent to which these
places are indeed competing with one another in commensurable markets in a manner
measurable on a common scale. In some cases, highly problematic comparisons have even
been made between regions (such as Wales) and countries (such as Chile) (see Huggins,
2000).
What this means is that the discourse of regional competitiveness necessarily paints a
picture whereby the dynamics of competition are shrouded overwhelmingly in positive
rather than negative connotations. Camagni (2002), for example, is one example of a
prophet of New Regionalism keen to assert that the way towards territorial
competitiveness, engaging public administrations and local communities in the
creation of a widening spectrum of pre-conditions. . .does not mean at all a wasteful
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zero-sum game (p. 2407). This is because, in his view, the regional economic gains
generated through knowledge-based improvements in rm performance generate
widespread technological and organisational spillovers and increasing returns.
Signicantly, however, he prefaces this statement with the word hopefully indicating
a clear lack of conviction in the validity of this assertion. When the larger spaces within
which spatial competition occurs and the uneven development that typies economic
differences between regions are introduced into the analysis, the dynamics of competition
appear more negative than positive (Sheppard, 2000). As Backlund and Sandberg
(2002, 90) observe in relation to a study of new media rms and networks, research
has been suffering from a success bias, primarily concerned with explaining why the
winners win and not why the losers lose. More empirical research needs to be
directed towards identifying what options there are for regions that do not have the
cultural and institutional conditions conducive to the development of innovative,
internationally successful rms. In the absence of this more rounded view of the
different modalities of regional competition, policy will continue to be based on the
rather naiive assumption that everyone can be a winner.
4. The political economy of regional competitiveness
This begs the question as to why a discourse with ostensibly confused, narrow and ill-
dened content has become so salient in regional economic development policy and
practice as to constitute the only valid currency of argument (Schoenberger, 1998,
12). Whilst alternative discourses based around co-operation can be conceived (e.g.
see Hines, 2000; Bunzl, 2001), they have as yet failed to make a signicant impact on
the dominant view that a particular, quantiable form of output-related regional
competitiveness is inevitable, inexorable and ultimately benecial.
The answer appears to lie within the policy process, which refers to all aspects involved
in the provision of policy direction for the work of the public sector. This therefore
includes the ideas which inform policy conception, the talk and work which goes into
providing the formulation of policy directions, and all the talk, work and collaboration
which goes into translating these into practice (Yeatman, 1998; p. 9). A major debate
exists in the policy studies literature about the scope and limitations of reason, analysis
and intelligence in policy-makinga debate which has been re-ignited with the recent
emphasis upon evidence-based policy-making (see Davies et al., 2000). Keynes is
often cited as the main proponent of the importance of ideas in policy making, since
he argued that policy-making should be informed by knowledge, truth, reason and facts
(Keynes, 1971, vol. xxi, 289). However, Majone (1989) has signicantly challenged the
assumptionthat policy makers engage in a purely objective, rational, technical assessment
of policy alternatives. He has arguedthat inpractice, policy makers use theory, knowledge
and evidence selectively to justify policy choices which are heavily based on value
judgements. It is thus persuasion (through rhetoric, argument, advocacy and their
institutionalisation) that is the key to the policy process, not the logical correctness or
accuracy of theory or data. In other words, it is interests rather than ideas that shape
policy making in practice.
Ultimately, the language of competitiveness is the language of the business community.
Thus, critical to understanding the power of the discourse is rstly, understanding the
appeal andsignicance of the discourse tobusiness interests and, secondly, exploring their
role in inuencing the ideas of regional and national policy elites.
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Part of the allure of the discourse of competitiveness for the business community is its
seeming comprehensibility. Business leaders feel that they already understand the basics
of what competitiveness means and thus it offers themthe gain of apparent sophistication
without the pain of grasping something complex and new. Furthermore, competitive
images are exciting and their accoutrements of battles, wars and races have an
intuitive appeal to businesses familiar with the cycle of growth, survival and
sometimes collapse (Krugman, 1996b).
The climate of globalisation and the turn towards neo-liberal, capitalist forms of
regulation has empowered business interests and created a demand for new concepts
and models of development which offer guidance on how economies can innovate and
prosper in the face of increasing competition for investment and resources. Global policy
elites of governmental and corporate institutions, who share the same neo-liberal
consensus, have played a critical role in promoting both the discourse of national and
regional competitiveness, and of competitiveness policies which they think are good for
them(suchas supportive institutions andfunding for researchanddevelopment agendas).
In the EU, for example, the European Round Table of Industrialists played a prominent
role in ensuring that the Commissions 1993 White Paper placed the pursuit of
international competitiveness (and thus the support of business), on an equal footing
with job creation and social cohesion objectives (Lovering, 1998; Balanya et al., 2000).
This discourse rapidly spread and competitiveness policies were transferred through
global policy networks as large quasi-governmental organisations such as the OECD
and World Bank pushed the national and, subsequently, the regional competitiveness
agenda upon national governments (Peet, 2003).
Part of the appeal of the regional competitiveness discourse for policy-makers is that
like the discourse of globalisation, it presents a relatively structured set of ideas, often in
the form of implicit and sedimented assumptions, upon which they can draw in
formulating strategy and, indeed, in legitimating strategy pursued for quite distinct
ends (Hay and Rosamond, 2002). Thus, the discourse clearly dovetails with
discussions about the appropriate level at which economic governance should be
exercised and ts in well with a growing trend towards the decentralised, bottom-up
approaches to economic development policy and a focus on the indigenous potential of
regions. For example, in the UK:
the Government believes that a successful regional and sub-regional economic policy must be
based on building the indigenous strengths in each locality, region and county. The best
mechanisms for achieving this are likely to be based in the regions themselves (HM Treasury,
2001a, vi).
The devolution of powers and responsibilities to regional institutions, whether
democratic or more narrowly administrative, is given added tour de force when
accompanied by the arguments contained within the regional competitiveness
discourse. There is clear political capital to be gained from highlighting endogenous
capacities to shape economic processes, not least because it helps generate the sense of
regional identity that motivates economic actors and institutions towards a common
regional purpose (Rosamond, 2002). Furthermore, the regional competitiveness
discourse points to a clear set of agendas for policy action over which regional
institutions have some potential for leverageagendas such as the development of
university-business relationships and strong innovation networks. This provides
policy-makers with the ability to point to the existence of seemingly secure paths to
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prosperity, as reinforced by the successes of exemplar regions. In this way, the discourse
of regional competitiveness helps to provide a way of constituting regions as legitimate
agents of economic governance.
The language of regional competitiveness also ts in very neatly with the ideo-
logical shift to the Third Way popularised most notably by the New Labour
government in the UK. This promotes the reconstruction of the state rather than its
shrinkage (as under neo-liberal market imperatives) or expansion (as under traditional
socialist systems of mass state intervention). Signicantly, this philosophy sees state
economic competencies as being restricted to the ability to intervene in line with
perceived microeconomic or supply-side imperatives rather than active macro-
economic, demand-side interventionan agenda that is thus clearly in tune with the
discourse around competitiveness.
The attractiveness of the competitiveness discourse may also be partly a product of the
power of pseudo-scientic, mathematised nature of the economics discipline and the
business strategy literature from which it emanates. This creates an innate impartiality
and technicality for the market outcomes (such as competitiveness) it describes
(Schoenberger, 1998). Public policy in developed countries experiencing the market-
isation of the state, is increasingly driven by managerialism which emphasises the
improved performance and efciency of the state. This managerialism is founded upon
economistic and rationalistic assumptions which include an emphasis upon measuring
performance in the context of a planning system driven by objectives and targets
(Sanderson, 2001). The result is an increasing requirement for people, places and orga-
nisations to be accountable and for their performance and success to be measured and
assessed. In this emerging evaluative state, performance tends to be scrutinised through a
variety of means, with particular emphasis placed upon output indicators. This provides
not only a means of lending legitimacy to the institutional environment, but also some
sense of exactitude and certainty, particularly for central governments who are thus able
to retain some top-down, mechanical sense that things are somehow under their control
(Boyle, 2001).
The evolutionary, survival of the ttest basis of the regional competitiveness discourse
clearly resonates with this evaluative culture. The discourse of competitiveness strongly
appeals to the stratumof policy makers and analysts who canuse it tojustify what they are
doing and/or to nd out how well they are doing it relative to their rivals. This helps
explain the interest in trying to measure regional competitiveness and the development of
composite indices and league tables. It also helps explain why particular elements of the
discourse have assumed particular signicanceoutput indicators of rm performance
are much easier to compare and rank on a single axis than are indicators relating to
institutional behaviour, for example. This in turn points to a central paradox in measures
of regional competitiveness. The key ingredients of rm competitiveness and regional
prosperity are increasingly perceived as lying with assets such as knowledge and
information which are, by denition, intangible or at least difcult to measure with
any degree of accuracy. The obsession with performance measurement and the
tendency to reduce complex variables to one, easily digestible number brings a kind
of blindness with it as to what is really important (Boyle, 2001, 60)in this case, how to
improve regional prosperity. Thus while a composite index number of regional
competitiveness will attract widespread attention in the media and amongst policy-
makers and development agencies, the difculty presented by such a measure is in
knowing what exactly needs to be targeted for appropriate remedial action.
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All of this suggests that regional competitiveness is more than simply the linguistic
expression of powerful exogenous interests. It has also become rhetoric. In other words,
regional competitiveness is deployed in a strategic and persuasive way, often in conjunc-
tion with other discourses (notably globalisation) to legitimate specic policy initiatives
and courses of action. The rhetoric of regional competitiveness serves a useful political
purpose in that it is easier to justify change or the adoption of a particular course of policy
action by reference to some external threat that makes change seem inevitable. It is much
easier for example, for politicians to argue for the removal of supply-side rigidities
and exible hire-and-re workplace rules by suggesting that there is no alternative
and that jobs would be lost anyway if productivity improvement was not achieved.
Thus, the language of external competitiveness. . .provides a rosy glow of shared
endeavour and shared enemies which can unite captains of industry and representatives
of the shop oor in the same big tent (Turner, 2001, 40). In this sense it is a discourse
which provides some shared sense of meaning and a means of legitimising neo-liberalism
rather than a material focus on the actual improvement of economic welfare.
5. Conclusions
The discourse of regional competitiveness has become ubiquitous in the deliberations and
statements of policy actors and regional analysts. However, this paper has argued that it is
a rather confused, chaotic discourse which seems to conate serious theoretical work on
regional economies, with national and international policy discourses on globalisation
and the knowledge economy. There are, however, some dominant axioms which
collectively dene the discourse, notably that regional competitiveness is a rm-based,
output-related conception, strongly shaped by the regional business environment.
However, regional competitiveness tends to be dened in different ways, sometimes
microeconomic, sometimes macroeconomic, such that it is not entirely clear when a
situation of competitiveness has been achieved. It is argued here that the discourse is
based on relatively thinly developed and narrow conceptions of how regions compete,
prosper and grow in economic terms. The discourse chooses to ignore broader, non-
output related modalities of regional competition which may tend to have rather more
negative than positive connotations. Moreover, it over-emphasises the importance of the
region to rm competitiveness and indeed the importance of rm competitiveness to
regional prosperity. In this sense proponents of regional competitiveness are guilty of
what the eminent philosopher Alfred North Whitehead termed the Fallacy of Misplaced
Concreteness. In other words, they have assumed that what applies to rms can simply be
read across to those other entities called regions, and that this is a concrete reality rather
than simply a belief or opinion.
The result is that regional economic development policy is ultimately very narrowly
focused. Policy under the rubric of competitiveness is not necessarily about collective
territorial economic performance at allit is about a particular aspect of a particular
subset of activities within that territory. In this sense there is only commensurability
between regions (or different groups of people) so long as you assert that there is i.e.
it is an outcome not of nature or science, but of a normative discoursewhich simply
asserts that this is what policy for places should be about.
Thus, in spite of being ill-dened the discourse of regional competitiveness has
become rmly ensconced into regional economic development policy because it provides
policy-makers with a means of justifying particular courses of action. Propelled by
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powerful business elites and the neo-liberal consensus, the discourse of regional com-
petitiveness has become a strategic, rhetorical device that is used to legitimate the decen-
tralisationof economic governance, supply-side economic interventions and performance
measurement imperatives. This implies that it will be very difcult to shift its current
hegemonic positionwithinpolicy unless regional institutions andcommunities themselves
become both more aware of the limitations of competitiveness policies and agendas and
more willing to exorcise them. Therein lies the challenge.
Acknowledgements
The author would like tothank Kevin Morgan, Philip Boland, John Lovering and three anonymous
referees for their constructive and incisive comments on an earlier version of this paper.
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