Improvements in information and communication technologies have allowed companies to relocate parts of their production process to countries with more favorable comparative advantages, as a consequence of which gross exports require the imports of intermediate inputs and gross export values are no longer indicative of the welfare consequences of a country’s exports. This ‘second global unbundling’ (Baldwin, 2006) has similar implications for the measures of competitiveness of regions defined at subnational level. Dudenhöffer (2005), for example, found that only 33% of the value of a high-end Porsche produced in a Leipzig (Sachsen) factory was actually added in Germany as a whole, after the firm decided to offshore important parts of the production process to the Bratislava region in the Slovak Republic. Before such offshoring was possible, each Porsche sold to e.g. a Bavarian or Austrian customer could be seen as a sign of competitiveness of Sachsen’s car manufacturing industry. After the second unbundling, such a regional gross export value indicates much less about Sachsen’s competitiveness in car manufacturing, because Sachsen’s own contribution is low. In this chapter, we use a newly developed database to provide the first assessments of the competitiveness of regions that address this problem. Such information is essential for the proper design of smart specialization strategies for these regions, since these should take into account the fact that regions and countries have become much more interdependent than they used to be.
|Title of host publication||The Empirical and Institutional Dimensions of Smart Specialisation|
|Editors||P. McCann, F.G. Van Oort, J. Goddard|
|Place of Publication||Abingdon|
|Number of pages||22|
|Publication status||Published - 2016|
|Name||Regions and Cities|