The impact of globalization on regional development and competitiveness: cases of selected regions

The objective of this study is to conduct an analysis of regional development and competitiveness in the EU and Latvia under current conditions of economic globalization. This paper makes an attempt to evaluate a theory of regional development and regional competitiveness concept in relation to regional competitiveness in the light of current global economic changes. The authors emphasise that the regional development is based on competitive advantages, which has been a subject of fundamental research by Michal Porter and that serves as a basis for the current scientific methodology to assess competitiveness of regions and countries. The authors support a view of many scholars to consider regional competitiveness as the capacity of a region (or country) to create and support competitive economic environment. Further research reveals the impact of globalization on regional development by analysing interaction between the Globalization Index (GI) and the Global Competitiveness Index (GCI). Quantitative and qualitative analysis, i.e. literature analysis, comparative analysis and correlation analysis performed for this study reflect that competitiveness under global economic conditions is determined by the development stage of each region – competitiveness of a less developed region is more dependent on production factors, while competitiveness of a higher developed region is based on innovation. The correlation analysis reveals that the impact of globalization is stronger for those EU countries, which are in the efficiency-driven stage of development thank for those, which are in the innovation-driven stage. The results of this research could be useful for economic policy makers to determine the role of institutions, policy instruments and factors, which are necessary for attaining higher productivity, efficiency and profitability better withstand forces of competition on global and regional markets.