On the competitiveness of the Flemish economy

The Flemish economy is a very open economy and as such heavily relies on trade with both the neighbouring economies as well as more distanced economies and it also tries to attract foreign direct investments. The paper reviews the evolution and interrelation of some competitiveness indicators in the recent past at the sectoral level. A first approach is discriptional of nature. Different indicators which are standard in a competitiveness comparison are investigated both graphically and numerically. This points out already some interesting, although tentitave, conclusions. These indicators comprise, among others, the real labour cost per working hour, relative prices and labour productivity. In a second approach a growth accounting framework is used to disentangle between the three main contributors to economic growth, namely the production factors capital and labour and total factor productivity growth. Furthermore, this framework is used to determine the main drivers of labour productivity growth, i.e. the evolution of capital intensity and total factor productivity growth. Although the applied production function framework is simple, with only two production factors, this already proves to be non-obvious, since the regional accounts of the Institute of National Accounts do not contain series about e.g. the capital stock. There seem to be quite some differences between the regions and sectors concerning both the evolution of the various indicators as well as e.g. the importance of the different drivers of labour productivity growth.