The significance accorded by policymakers to the notion of competitiveness reflects the increasing emphasis on competitive advantage for national economies. Policy makers across the OECD stress that their countries must become more “competitive” if they are to maintain their economic position vis-à-vis other industrial or developing nations and respond to challenges such as perceived productivity gaps, competition for mobile investment, rapid adoption of new technology and electronic commerce.
Increasingly, the concept of competitiveness is extended to the regional level. A competitive region is one that can attract and maintain successful firms and maintain or increase standards of living for the region’s inhabitants. Skilled labour and investment gravitate away from “uncompetitive” regions towards more competitive ones.
The extension of the competitiveness concept to the regional level is recent but is having a major influence on the direction of regional development policy. In particular, it is supporting a revival of interest in a new form of regional policy. In the past, regional policy attempted to make regions more competitive by attracting in internationally competitive firms, but with limited success. The search for a new approach to regional development is now mainly focused on making domestic firms more competitive. This has led to an emphasis on regional "assets" as the source of firm competitiveness, not only physical infrastructure but also other "soft" or less tangible factors.
OECD work on regional competitiveness addresses both the measurement of regional performance through regional statistics and indicators using the OECD Regional Database and policies to address key factors that can improve the competitiveness of regions. Recent work is focusing on the significance of regional specialisation and clusters including a benchmarking of national cluster policies and a benchmarking of regional strategies as a target for policy and on the role of higher education institutions in regional development. Regional competitiveness is a key themes in the national territorial reviews, in work on urban policy and on rural development.