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10THE COMPETITIVENESS OF THE REGION: METHODOLOGICAL PROBLEMS OF RESEARCH
Lyudmila G. Batrakova
Yaroslavl State Pedagogical University named after K.D. Ushinsky, Russia E-mail: [email protected]
Abstract. The theory of competition received the most complete development in the middle of XIX century in «Capital» by K. Marx «Capital». However, in the late 19th and early 21st centuries, the competitiveness of the regions became an independent research area. M. Porter made a great contribution to the development of competition theory and practice. However, the methodological problems of the study of the competitiveness of the region are still not given the sufficient attention. There is no common interpretation of the essence of «regional competitiveness», no system of indicators and factors shaping regional competitiveness but there are many methods for evaluating it.
The article identifies groups of factors determining the competitiveness of the regions and their competitive advantages, shows the relationship of competitiveness to the socio-economic development of the region, defines the stages of use of programme-targeting method for managing regional competitiveness. It has been shown that one of the main strategic objectives of the socio-economic development of the regions should be to improve their competitiveness.
Keywords: competition, regional competitiveness, competitive advantage, programme-targeting method, ranking. JEL codes: E01, А52
For citation: Batrakova L.G. (2021). The competitiveness of the region: methodological problems of research, JOURNAL OF REGIONAL AND INTERNATIONAL COMPETITIVENESS 3(2), 4-12. Retrieved from http://jraic.com/index.php/tor/article/ view/25/19
DOI: 10.52957/27821927_2021_2_4
Competition is a scientific category inextricably linked to the functioning of socio-economic systems. It is a key concept expressing the essence of market relations. The concept of competition itself was formed in ancient times and comes from the Latin concurrentia «collision, escape», but the modern term «competition» comes from the German word «konkurrenz». Competition was understood to be a conflictual rivalry that led to the acquisition of various advantages by certain over others.
Competition arose simultaneously with market relations, and the first works on the role of competition came from the classical school of political economy, William Petty (1623-1687) and Anna Robber Jacques Thurgo (1727-1781). However, the first theoretical provisions of competition were formulated in the middle of XVIII century by Adam Smith (1723-1790) as one of the founders of economic theory in «The Study on the Nature and Causes of Wealth of Nations» (1776) where he studied the specificities of competition at the micro level, developed a competition mechanism, identified the basic conditions of its efficiency. «The Beginning of Political Economy and Taxation» by David Ricardo (1772-1823) and «A treatise of political economy, or a simple description of the way in which wealth is created, distributed and consumed» by Jean-Baptiste Saya (1767-1832) so as other representatives of classical school of political economy made a definite contribution to the theory of competition.
The most complete development of competition theory came in the middle of XIX century in the context of capitalism and marxism. The German philosopher and economist Karl Marx (1818-1883) considered competition as one of the driving forces for the development of the capitalist mode of production («Capital», 1867).
Competition and competitiveness are not identical. In general, competitiveness is the ability of an
Introduction
economic entity to maintain and improve its position, outperforming others in achieving certain objectives.
Competitiveness is the ability to:
- to compete successfully in product markets (enterprise competitiveness);
- exploit competitive advantages (regional competitiveness).
For a region, achieving competitiveness leads to an opportunity to improve its efficiency as well as to take a higher place in the federal system. Nowadays competitiveness is becoming a basic condition for the sustainable functioning of Russian regions, and its main goal is to improve the living standards of the region's inhabitants. Regional competitiveness contributes to ensuring and enhancing the economic security of the region, which is achieved through the effective operation of enterprises in the real sector of the economy.
In the late 19th and early 21st centuries, regional competitiveness has increasingly come to be seen as a research area in its own right, underlining the theoretical and practical relevance of regional development analysis. Despite the importance of this area of research, it seems that insufficient attention has been paid to methodological issues. Probably because competitiveness of a regional perspective has not been a subject of scientific research for a long time. However, «regional competitiveness» as an economic category has not yet been fully defined. There are differences not only in the definition of the concept, but also in the analysis of the factors shaping regional competitiveness.
The formation and development of national competitiveness is considered in the works of American scientist Michael Eugene Porter (born 1947). He wrote that only those territories can be competitive which, having competitive advantages, retain them and, most importantly, create them.
Many scientists have contributed to the development of the conceptual apparatus of national and regional competitiveness, among them are R.A. Fatkhutdinov, A.Z. Selezneva, L.S. Shekhovtseva, N.Y. Kalyuzhnova and others.
In exposing the theoretical aspect of the essence of regional competitiveness, should be noted that economists are not united on the content of this concept, since there is no generally accepted definition of the term «competitiveness of the region» and, indeed, there are many approaches to interpreting its content and methods of assessment.
The classical approach to regional competitiveness was defined by M. Porter. He indicated it is a consequence of the competitiveness of firms located in the region (Porter, 2002a; Barabanov, 2014).
The Long-term Economic and Social Development Framework of the Russian Federation up to 2020 defines the region's competitiveness as the realization of its development potential (The Long-term Vision... 2020).
There are opinions that regional competitiveness is «the availability and realization of the competitive potential of a region» (Regional Economy, 2007). So, could be said, the competitiveness of a territory as a whole is «a defining characteristic of the level and prospects of regional development» (Comprehensive evaluation..., 2007, p. 44). And the city's competitiveness is in the protection of its market share (Begg, 1999, pp. 795809). Also, there is the opinion, that «regional competitiveness is a multifactorial economic category which is dialectically interconnected with the competitiveness of a given region» and the regional competitiveness is a factor of economic development that can be described as a complex set of indirect factors (Chebykina, Gracheva, 2016, p. 5).
Professor V.A. Gordeev's opinion is interesting, which, in the analysis of competition, uses methods of systemic-evolutionary, system-structural and system-functional analysis (Gordeev, 2013). A number of authors point out that in a globalizing world, the region's competitiveness is a readiness to respond to the challenges of the global environment (Regional Basics..., 2007, pp. 160-163).
A large selection of definitions of regional competitiveness can be found in L.N. Chaynikova's monograph «Methodological and Practical Aspects of Regional Competitiveness Assessment», besides the theoretical aspects of competitive advantages and methods of regional competitiveness assessment are analyzed. (Chaynikova, 2008).
Results and discussion
We agree with the position of those authors who define the competitiveness of a region as the ability of a federal subject to realize the available economic potential for stable socio-economic development of the region in order to ensure a high quality of life for its population (Vasilyeva, 2010; Belyakova, 2001; Chub, 1999).
We consider the notion of regional competitiveness in relation to temporal characteristics:
- in statics, we can talk about the competitiveness of regions immediately for a set time. According to I. Begg, in this case competitiveness depends on the sectoral structure of the regional economy, the efficiency of institutions and other factors (Begg, 1999);
- in dynamics, competitiveness shows itself not only in rivalry, but also in the possibility of improving it. I. Begg pointed out that in the long run competitiveness depends on the ability to achieve sustainable changes in the factors that lead to productivity growth (Begg, 1999).
An important economic component of regional competitiveness is competitive advantage, which was first scientifically substantiated in the 1970s and 1980s by M. Porter (Porter 1993b; Porter 2005c). It is a certain value of a particular region that allows it to compete with others. Competitive advantages can be divided into actual, realisable and potential competitive advantages, which, depending on the development of the region, include such potentials as resource, financial, environmental, etc. Furthermore, competitive advantages are grouped according to their type:
- low-order advantages, which cannot provide long-term advantages over competitors (cheap resources: labor, material, financial; preferentially low prices for the purchase of goods);
- high-order advantages, which indicate that the region is sustainably competitive, i.e., it finds itself in a leading and unattainable position for some time (unique products, technologies, specialists, etc.; recognizable brands).
Regional competitive advantages are most often determined by a set of natural, institutional, socioeconomic, scientific, educational, informational and other conditions prevailing in a region.
The economic components of a region's competitiveness are closely connected with its socio-economic development (Figure 1).
Competitive potential of the Competitive advantages of region - the degree of _^ the region - more favorable
readiness of the region to positions of the region
ensure competition
Competitiveness of the region - the ability to implement the main target for sustainable socio-economic development of the region
I
Socio-economic development of the region -a process, aimed at improving the quality of life of the population of the territory
Figure 1. The relationship between the socio-economic development of the region and its competitiveness
Source: composed by the author
The competitiveness of a region is determined by various factors: economic, social, political, etc., and can be assessed in different ways. It should be mentioned, I. Begg considers productivity, employment and quality of life as indicators of competitiveness, and M. Porter considers productivity of use of regional resources (labor force, capital, etc.). From the point of view of the World Bank, the successful development of a region can be assessed by such indicators as: the level of GRP, the amount of natural and productive resources, and the education of the population.
The competitiveness of the regions of Russia is shaped by contradictory conditions, which have both positive and negative effects on it (Regional economy ... 2007, p.122), therefore for good governance it is
important to identify and analyze the factors determining the competitive advantage of the region. The main sets of factors and statistical indicators for analyzing the competitiveness of the region are presented in table 1. In terms of time characteristics, regional competitiveness factors can be divided into static (natural-climatic, geographical, etc.) and dynamic (demographic, socio-economic, logistical, political, etc.).
Table 1 - Groups of factors that determine the competitiveness of regions and their competitive advantages
Factor Groups Indicators and directions of competitiveness development Competitive advantages
Internal factors of the region's competitive advantages and competitiveness
institutional - federal regulatory and legislative framework; - the presence of regional legislation that determines the directions for improving the competitiveness of the region and protecting the interests of investors in the region; - institutional structure - regional conditions for the development of competition
financial and economic indicators - gross regional product, including per resident of the region; - the region's net financial result; - the level of development of the region's economy; - economic efficiency of production; - structure of the labor market; - the share of employees in small and medium-sized enterprises in the total number of employees in the region; - financial stability of the region's enterprises - diversified structure of the economy; - industry specialization of the region; - development of small and medium-sized businesses in the production sectors of the economy; - development of the service sector; - low unemployment rate; - efficiency of the use of the fixed capital of the region
infrastructure projects - the state of the infrastructure (social, telecommunications and ICT, transport, banks, etc.) - development of the social and business infrastructure sector
investment projects - the volume of investments in the economy of the region; - investment efficiency; - formation and use of investment resources; - investments in fixed assets; - share of foreign direct investment - investment attractiveness; - mobilization of investments in the real sector of the economy and their effective use
scientific and technical - NTP achievement level; - availability of universities, technology centers, and research organizations; - number of scientists per 10,000 people of the population - the speed of updating the fixed assets of the region on a higher technological basis; - level of development of science and scientific research
Factor Groups Indicators and directions of competitiveness development Competitive advantages
entrepreneurial and innovative activity - innovative strategy of the region; - share of innovative products in gross regional product; - the share of innovative products sold in the volume of industrial products - innovative mobility; - availability of high scientific, intellectual and innovative potential of the region
- the standard of living of the population (the size of the subsistence minimum, the level of
socio-demographic indicators income of the population, etc.); - the demographic situation (population size, dynamics of natural growth, gender and age composition of the population, etc.); - development of human capital (intellectual capital, level of education, development of culture, health care, etc.) - low cost of living; - high purchasing power of the population; - good demographic situation; - high level of human capital development
information services - ICT development index; - use of information technologies and information and telecommunications networks by the - the level of development of information and communication
population; - availability of telecommunications technologies
services
resource resources - the quantity and quality of resources available to the region; - the level of qualification of the workforce - availability of a knowledge resource; - availability of a highly qualified workforce
External factors of the region's competitive advantages and competitiveness
natural and geographical features - geographical location; - size of the territory; - climatic conditions - favorable economic-geographical and transit position; - favorable climatic conditions
environmental issues - effectiveness of environmental - favorable environmental
management conditions
political - state support for the development of entrepreneurship; - the degree of stability of the political situation in the country - regional support for the development of entrepreneurship
integration of the region into the global economic space - changes in the global economy and international competition in the context of globalization; - structure of export and import (import and export) of the region; - a high degree of involvement of the region in the international and interregional division of labor; - possibility of interregional cooperation
Factor Groups Indicators and directions of competitiveness development Competitive advantages
- the presence of joint ventures and enterprises with foreign investments in the sectors of the economy
Source: composed by the author
Problem-based management methods, one of which is program-based management, can be used to deal with long-term and complex situations in shaping the competitiveness of a region. The use of program-based management of the economy began in the 1920s with the creation of a targeted economic program for the electrification of Russia (the GOELRO plan). Later, the USSR gained a great deal of experience in developing targeted integrated programs. The methodology of the program-oriented method was developed in the USSR in 1960-1970. By its essence, it was similar to the Western technology of Peter Drucker's «Management by Objective» (Drucker, 2013).
In the programmed-oriented method, the set goals and objectives form a multi-level, hierarchically constructed target system characterized by a high level of concreteness, quantitative certainty and adaptability to the search for effective solutions (Skulches, 2012). The ultimate result of the program-based approach is the development of targeted programs that improve the credibility and soundness of plans, while at some point taking into account legal and regulatory constraints (Figure 2).
Choosing priorities
Assessment of financial opportunities
Development of the mechanism of action and regulatory support
_> Pilot projects.
Implementation in the region
Figure 2. Stages of the program-target method
Source: composed by the author
The formula for program-based planning can be presented in the form of «objectives - ways to achieve the objective - means to achieve the objective - resources to achieve the objective - organization of implementation» or in short «objectives - ways - means».
L.S. Shekhovtseva proposes to use a program-targeted method based on regional determinants. For this purpose, a two-level «target tree» is formed and defines the significance of the objectives having temporal and quantitative characteristics. Thus, the influence of a factor on competitiveness is established (Shekhovtseva, 2001; Sidorenko, Voskanov, 2014).
There is a wide variety of different methodologies for the integral assessment of regional competitiveness. Their existence proves that a methodology for competitive analysis is still under development. We consider some of the most popular techniques in brief:
- ranking of socio-economic development with the subjects of the Russian Federation, based on a comparative analysis of the subjects of the Russian Federation according to a large set of indicators
characterizing various aspects of socio-economic development, as well as calculating a composite indicator allowing to position the subject among other regions;
- techniques related to multivariate statistical analysis: V.V. Pechatkin, S.U. Salikhov and V.A. Sablina applied methods of multivariate correlation and regression analysis using linear regression models in their study (Pechatkin, 2004). V.V. Merkushov used multivariate non-parametric methods, such as the method of relative differences, the Pattern method, and constructed a parabolic equation of the dependence of the standard of living on the level of competitiveness of the region (Merkushov, 2004). The advantage of the methodologies is that they are based on statistical methods of data processing and the construction of a system of indicators, including those characterizing the economic potential of the region, competitive advantages, etc. A disadvantage of the techniques is the large number of indicators used;
- L.I. Ushvitsky and V.N. Parakhina's methodology, which uses indicators of the region's investment attractiveness and activity, and the calculation of the integral coefficient of competitiveness of the region is carried out using the geometric mean formula. The advantage of the method is the accessibility of the information base, while the disadvantage is the missing of consistency in the choice of competitive factors;
- the assessment of regional competitiveness based on the N.I. Larin and A.I. Makayev index is similar to that used to determine country rankings. The advantages are the accessibility of the information base and the validity of the indicators for determining the level of competitiveness, while the disadvantage is that the methodology characterizes only general economic development;
- B.M. Grinchel and V.E. Kostyleva's methodology is based on different methods of assessing regional competitiveness: 1) on a ranking method of assessment (ranking method), 2) on the use of models for measuring regional potentials (financial, resource, natural, etc.) (Grinchel, Kostyleva, 2003);
- A.V. Antokhina's methodology assesses the competitiveness of a region based on a developed system of three groups of indicators: the level of economic development of the region, living standards of the population and investment attractiveness. The integral is calculated using the geometric mean formula. The advantage of the methodology is that it is based on official statistical reports published by the Federal State Statistics Service and no subjective weighting factors are used in the calculations (Antokhina, 2017). A disadvantage of the methodology is the missing of indicators of the competitive advantages of the regions.
Applying the methodology for rating socio-economic development of the subjects of the Russian Federation, we have concluded that there are significant differences between the regions in terms of socioeconomic level of development, their investment attractiveness, favorable economic-geographical and transit location, etc. The most economically developed are the oil and gas areas. For example, Tyumen oblast per capita GRP is 28 times richer than the Republic of Ingushetia (Abramyan, 2020). Statistical data by the dynamics of GRP per capita by regions of Russia are shown in Table 2.
Table 2 - TOP-10 subjects of the Russian Federation in terms of «Gross regional product per capita» (thousands of rubles)
Subject of the Russian Federation Years
2015 2016 2017 2018
Nenets Autonomous Okrug 5 210.1 5 821.6 6 288.5 6950.4
Yamalo-Nenets Autonomous Okrug 3 336.5 3 670.3 4 581.2 5710.1
Khanty-Mansi Autonomous Okrug-Yugra 1 947.7 1 852.3 2 127.2 2680.1
Sakhalin region 1 716.7 1 575.6 1 577.9 2407.9
Chukotka Autonomous Okrug 1 226.2 1 323.2 1 386.1 1578.5
Moscow 1 102.5 1 157.4 1 263.7 1423.6
Magadan region 854.6 1 006.6 1 088.3 1196.7
Republic of Sakha (Yakutia) 780.1 903.6 951.2 1123.1
Subject of the Russian Federation Years
2015 2016 2017 2018
Tyumen region (without districts) 628.1 632.2 680.9 834.8
Komi Republic 614.0 640.6 679.2 796.8
Source: Regions of Russia, 2020
Russian regions such as Moscow and St. Petersburg have a distinct competitive advantage. Moscow ranks first in the regional competitiveness index (Abramyan, 2020). The development of the knowledge in the field of economy in the regions is related to science cities. There are 75 in Russia, but more are situated (31) in Moscow oblast (Batrakova, 2019a).
In terms of the Human Development Index (HDI), defined by income, educational attainment and longevity, the regions of the Russian Federation also differ significantly. Moscow, St. Petersburg and Tyumen Region have the greatest competitive advantages (Abramyan, 2020). The HDI of Moscow is almost the same as that of Norway, and the only region where the HDI is less than 0.8 is the Republic of Tyva (Batrakova, 2021b).
Conclusion
In conclusion, we note that a comprehensive assessment of regional competitiveness is important for the innovative development of territories. Therefore, one of the main strategic objectives for the socioeconomic development of regions should be the improvement of their competitiveness. Strategic management is designed to ensure the long-term survival of the region and to identify competitive advantages.
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© Ludmila G. Batrakova, 2021
Received 18.03.2021
Accepted 20.05.2021
