ABSTRACT
After many years of austerity and limited or negative growth, European regional authorities dare thinking in economic growth terms again. Selectively choosing economic specialisation and diversification opportunities in line with entrepreneurial search processes are part of smart specialisation strategies. By nature or by history, some regions seem better endowed with growing or promising sectors than other regions. But even regions specialised in globally growing markets face continuous competition, and hence can become less competitive when other regions gain larger market shares in smart specialised niche markets. This chapter introduces within a conceptual framework of regional competitiveness a decomposition method of local economic growth that shows whether regions grow because of generic rising (or declining) demand for the products and services produced (demand led growth), and/or because of strengthening their competitive market positions (structural growth). Performing for better or for worse on these two dimensions of growth shows that seemingly favourable total regional growth figures may be solely attributable to demand-led growth, while structural growth is negative – meaning that the region is not competitive and loses market shares structurally (‘bad growth’). On the other hand, regions may operate on generally stable or slightly declining markets, yet gain substantial market shares. Apparently these regions are very competitive and strong in structural growth (‘good growth’). Exploring the scores of European regions along the two dimensions of growth, we show that demand-led and structural growth are taking place simultaneously yet independently from each other and shaping the longrun competitive advantages of regional specialisations, and hence provide crucial information on the competitive smartness of prolonging these specialisations.
