European Commission: Estonia's strength is efficiency of education, public sectors

TALLINN – According to the EU Regional Competitiveness Index (RCI) published by the European Commission, Estonia exceeds the European average primarily in the field of education and public sector efficiency.

Launched in 2010 and published every three years, the RCI allows EU regions to monitor and assess their development over time and in comparison with other regions. It is an important tool that provides a European perspective on the competitiveness of regions based on 68 indicators.

The fully revised RCI 2.0 shows that there are still large differences between EU regions, but also that the less developed regions have been improving their competitiveness. The index also shows that the regions of Utrecht, Zuid-Holland and the French capital region of Ile-de-France are the most competitive regions in the EU.

Estonia's regional competitiveness stands out primarily for the efficiency of the state sector and education, but also, for example, in terms of a well-developed business system and macroeconomic indicators. Estonia lags behind the EU average primarily due to the small size of the market, as well as in the field of infrastructure and healthcare.

Between the 2016 and the 2022 editions of the index, regional competitiveness has improved in the less developed regions, while the performance of transition regions has been more mixed. More developed regions continue to be the top performers.

The lowest values are, nonetheless, still concentrated in the less developed regions of the eastern EU member states.

All the regions in eastern EU member states improved their performance between the 2016 and the 2019 editions, while the performance in the southern EU regions, which also present relatively low levels of competitiveness, was mixed. Between the 2019 and 2022 editions, most eastern EU regions continued to catch up, including in the Baltic states, Croatia, Hungary, Poland, and Slovenia. However, parts of the Czech Republic, Romania, Slovakia, and Bulgaria moved further away from the EU average.

In the southern EU, the regions in Portugal, Spain and most of Greece improved their performance, albeit the latter from very low levels, but most of the regions in Italy and Cyprus moved away from the EU average.

Capital regions are almost always the most competitive, but the gap is lower in more competitive member states. Capital city regions are the most competitive in all member states but Germany, Italy, and the Netherlands. The gap with the other regions can be wide and is particularly high in France, Romania and Slovakia. More competitive countries tend to have a smaller gap between their capital city region and the other regions. This underlines that public policies and investments should promote upward convergence, which help less competitive regions to improve their performance and catch up, while ensuring that the most competitive regions continue to thrive.

In more competitive regions, GDP per head is higher. In these regions, women have better framework conditions, hence can achieve better results and fewer young women are neither in employment, nor in education or training (NEET rates). Finally, more competitive regions are particularly attractive for recent graduates, as it is easier to find a job there.

In Estonia, the GDP per head of the North Estonia region, which also includes Tallinn, is 121 percent of the EU average, while in other regions of Estonia it is between 48 and 60 percent.