Measuring Competitiveness: A Composite Indicator for Italian Municipalities

This study measures territorial competitiveness at the municipal level in Italy, by proposing a robust composite indicator based on variables not yet used in the literature. The underlying theoretical framework is identified based on the literature on regional competitiveness. The proposed indicator consists of the following seven dimensions of competitiveness: Education, Job, Economic Wellbeing, Territory and Environment, Entrepreneurship, Innovation, and Infrastructures and Mobility. Data are retrieved mainly from administrative sources, for 2014 and 2015. In the building process, three aggregation methods are compared: a compensatory method, the arithmetic mean, and two partially compensatory methods, the geometric mean and the Adjusted Mazziotta-Pareto Index (AMPI). The arithmetic mean turns out to be the most robust method among the three considered, but the AMPI is the most robust method among the two partially compensatory methods. All the methods considered agree in identifying Innovation and Entrepreneurship as the most influential pillars in 2014 and 2015, respectively. The detailed geographical focus provides specific insights into territorial competitiveness in Italy. It emerges a rather heterogeneous picture of municipal competitiveness within the Italian regions. Highly competitive municipalities are present in every region, though with different concentration levels.