BACHELOR´S DEGREE FINAL PROJECT
Indus ial E olu ion and Compe i i eness in he
Basque Coun y: Insigh s om a compa ison wi h
Baden-Wü embe g
Deg ee in Economics
Cou se 2024/2025
Au ho : And és Eche e ia Cas o
P o esso : Jesús M. Valdaliso Gago
INDEX
1. In oduc ion 2
1.1. Backg ound and P oblem S a emen : Indus ial E olu ion and Compe i i eness in Regional
Con ex s 2
1.2. Signi icance o he S udy and Jus i ica ion o he Compa a i e Analysis: 3
1.3. Objec i es o he Resea ch 4
2. Theo e ical F amewo k 4
2.1. De ining and Concep ualizing Regional Compe i i eness: E olu ion and Key App oaches 4
2.2. Regional Benchma king: Founda ions, Types and Limi a ions 7
2.3. The Regional Compe i i eness Index (RCI) as an Analy ical F amewo k: S uc u e and
E olu ion 9
3. Me hodology 13
3.1. Selec ion o Regions: Jus i ica ion o he compa ison be ween he Basque Coun y and
Baden-Wü embe g 13
3.2. Uni o Te i o ial Analysis: Conside a ions o NUTS 1 s. NUTS 2 Le els 14
3.3. Da a Sou ces and Va iables: Analysis o he Regional Compe i i eness Index (RCI 2.0) 2016,
2019, and 2022 14
3.4. Complemen a y Quali a i e Da a and Analysis 15
3.5. Me hodological Limi a ions and Challenges 16
4. Compa a i e Analysis o Regional Compe i i eness 16
4.1. O e iew o Economic De elopmen T ajec o ies and Cu en Posi ion o he Basque Coun y
and Baden-Wü embe g 16
4.2. E olu ion and Compa ison o he O e all RCI Sco es: Basque Coun y and
Baden-Wü embe g (2016-2022) 18
4.3. Compa a i e Analysis o he 11 RCI Sub-indices: Iden i ying S eng hs and Weaknesses 20
5. Indus ial Con ex and O e all Policy Analysis 25
5.1. Indus ial E olu ion in he Basque Coun y: Key T ends, T ans o ma ions, and Challenges in
Recen Decades 25
5.2. Indus ial E olu ion in Baden-Wü embe g: Key T ends, T ans o ma ions, and Success
Fac o s 29
5.3. Iden i ica ion o Po en ial Lessons o he Basque Coun y om he Baden-Wü embe g
Expe ience 31
6. Conclusions 32
6.1. Summa y o Key Findings om he Compa a i e Analysis 32
6.2. Implica ions and Conside a ions o he Basque Con ex 33
6.3. Limi a ions o he S udy and Fu u e Resea ch Di ec ions 34
7. Bibliog aphy 35
2
FIGURES INDEX
Figu e 1. De e minan s o compe i i eness a di e en le els. 6
Figu e 2. RCI 2.0 amewo k s uc u e 11
Figu e 3. E olu ion o egional GDP pc 17
Figu e 4. Sha e o Indus y and Mining in To al Employmen . 18
Figu e 5. EU Regional Compe i i eness Index 2.0 -2022 edi ion o BW and PV Sco es (2016–2022)
20
Figu e 6. EU egional Compe i i eness Index 2.0 Sco es 2022. 25
Figu e 7. Summa y o Basque Regional S a egy 2008-2020. 29
TABLES INDEX
Table 1. Weigh ing scheme o he h ee RCI sub-indices, di e en ia ed by de elopmen s age. 12
Table 2. E olu ion o RCI 2.0 11 pilla s sco e (2016–2022) 21
3
Abs ac
This s udy explo es he indus ial e olu ion and egional compe i i eness o he Basque
Coun y h ough a compa a i e pe spec i e wi h Baden-Wü embe g. Using he Regional
Compe i i eness Index (RCI) 2.0 as he main analy ical ool, alongside complemen a y
quali a i e analysis, he esea ch assesses he de elopmen ajec o ies o bo h egions du ing
he las decades. The aim is o be e unde s and he ac o s ha ha e in luenced hei
espec i e pe o mances and o e lec on possible a eas o imp o emen o he Basque
con ex . While Baden-Wü embe g gene ally main ains s onge compe i i eness indica o s,
he Basque Coun y shows no able p og ess in speci ic dimensions. Ra he han p esc ibing
conc e e solu ions, he s udy seeks o con ibu e o a b oade discussion on egional
de elopmen s a egies and o highligh elemen s ha could in o m u u e policy
conside a ions.
Keywo ds
Regional compe i i eness; indus ial policy; Basque Coun y; Baden-Wü embe g;
benchma king; inno a ion sys ems; RCI 2.0; egional de elopmen ; compa a i e analysis;
e i o ial s a egy.
4
1. In oduc ion
1.1. Backg ound and P oblem S a emen : Indus ial E olu ion and
Compe i i eness in Regional Con ex s
The s udy o indus y, egional compe i i eness, and economic de elopmen has been a
cen al ocus o my academic aining, mo i a ing his esea ch p ojec . This in e es o
unde s and why ce ain egions (wi hin and ac oss na ional bo de s) expe ience di e en
de elopmen al pa hs was, in ac , a key eason behind my decision o pu sue a deg ee in
economics. The dynamics o how some egions manage o excel in e ms o compe i i eness,
inno a ion, and o e all quali y o li e ep esen a co e a ea wi hin economic and e i o ial
analysis. In his con ex , he Basque Coun y holds a pa icula ly compelling signi icance o
me, no only as my home egion wi h i s dis inc his o y o egional au onomy bu also due o
i s sus ained s ong economic and social indica o s in compa ison o neighbou ing a eas. This
has os e ed a deep in e es in esea ching he ac o s and causes o his no ewo hy
pe o mance.
Mo eo e , o gain deepe insigh s in o how he Basque Coun y migh u he enhance i s
compe i i e edge, he s udy o success ul models in o he Eu opean con ex s o e s a aluable
pa h. Speci ically, Baden-Wü embe g wi h i s well-es ablished indus ial s eng h and high
le els o compe i i eness, s ands ou as a pa icula ly ele an case o compa ison.
Consequen ly, his esea ch unde akes a compa a i e analysis be ween he Basque Coun y
and Baden-Wü embe g o examine hei indus ial de elopmen and compe i i eness
ajec o ies, aiming o ex ac insigh s ele an o cu en and u u e egional challenges.
1.2. Signi icance o he S udy and Jus i ica ion o he Compa a i e Analysis:
In oday's wo ld, unde s anding wha makes some egions mo e compe i i e han o he s is
inc easingly c ucial. Fo egions like he Basque Coun y, wi h i s indus ial his o y and
aspi a ions o con inued economic and social p og ess, ho oughly analysing he ac o s ha
d i e hei compe i i eness is key o making in o med decisions and planning o he u u e.
This s udy is ele an as i con ibu es o a deepe unde s anding o hese aspec s wi hin he
speci ic con ex o he Basque Coun y, a egion wi h i s own unique cha ac e is ics and a
his o y o ela i ely s ong economic pe o mance. In an e a ma ked by apid echnological
change, he u gency o ecological ansi ion, and he ongoing ans o ma ion o indus ial
sec o s, knowing how o enhance egional compe i i eness is undamen al o sus ained
p ospe i y.
To lea n how he Basque Coun y could become e en mo e compe i i e, his s udy adop s a
compa a i e app oach by selec ing ano he success ul Eu opean egion as a poin o
e e ence. Baden-Wü embe g, in Ge many, has been chosen due o i s s ong indus ial base,
commi men o inno a ion, dense ne wo k o small and medium-sized en e p ises ( he
5

enowned 'Mi els and'), and e ec i e collabo a ion be ween uni e si ies, businesses, and
public ins i u ions.
Addi ionally, i is impo an o no e how p e ious esea ch al eady iden i ies
Baden-Wü embe g as a aluable compa ison o he Basque Coun y. Fo ins ance, in a
wo k by Na a o A ancegui and o he s (2011), i is explained how Baden-Wü embe g is a
egion ha is close in many ways o he Basque Coun y, making i use ul o compa ison.
Fu he mo e, in he epo s ha O kes a p oduces on he compe i i eness o he Basque
Coun y (O kes a, 2020; O kes a, 2021; O kes a, 2022 O kes a, 2023),
Baden-Wü embe g—alongside Uppe Aus ia—is also used as a e e ence, because hey
sha e simila i ies and pe o m g ea economically and socially. Needless o say, bo h he
Basque Coun y and Baden-Wü embe g sha e a s ong indus ial adi ion and he idea ha
inno a ion is key o g ow h. The e o e, analysing which s a egies and ac o s ha e led
Baden-Wü embe g o be so compe i i e can gi e us aluable ideas and lessons o he
Basque Coun y o con inue s eng hening i s economy and i s u u e.
1.3. Objec i es o he Resea ch
The cen al aim o his esea ch is o conduc a compa a i e assessmen o he indus ial
e olu ion and compe i i eness o he Basque Coun y and Baden-Wü embe g. The ul ima e
goal is o o iden i y ele an insigh s ha could in o m and po en ially suppo he economic
de elopmen o he Basque Coun y. This s udy will sys ema ically add ess his aim h ough a
egional benchma king me hodology, guided by he ollowing main aims:
Fi s , o es ablish a ounda ion o compa ison, he s udy will unde ake a quan i a i e
assessmen o compe i i eness le els in bo h egions, p ima ily u ilizing egional da a such as
GDP pe cápi a and Regional compe i i eness in he las decades. La e , he analysis will
ocus on he Regional Compe i i eness Index (RCI) 2.0 indica o o e a sho e and mo e
ecen ime ame. This ini ial analysis will iden i y key pe o mance di e ences and ends,
in o med by es ablished heo ies o egional compe i i eness and benchma king.
Second, he esea ch will explo e he unde lying ac o s ha ha e shaped he economic
pe o mance o he Basque Coun y and Baden-Wü embe g. This will in ol e examining
bo h quan i iable da a and quali a i e aspec s, such as indus ial policies, inno a ion sys ems,
and he oles o key ins i u ions in each egion.
Thi d, he s udy aims o iden i y speci ic, e ec i e s a egies and policies implemen ed in
Baden-Wü embe g ha ha e con ibu ed o i s compe i i eness. A c i ical e alua ion will be
made ega ding he po en ial o adap ing and applying hese lessons o he Basque con ex .
Finally, he esea ch will syn hesize he indings om he compa a i e analysis o unde s and
he undamen al d i e s o pe o mance a ia ions. This will culmina e in he de elopmen o
conclusions and po en ial policy ecommenda ions o he Basque Coun y, d awing aluable
insigh s om he expe ience o Baden-Wü embe g.
6
2. Theo e ical F amewo k
2.1. De ining and Concep ualizing Regional Compe i i eness: E olu ion
and Key App oaches
Compe i i eness s ands as a co ne s one concep wi hin bo h economics and he ield o
egional de elopmen s udies, e en hough i s ini ial oo s lie in s a egic managemen a he
i m le el and in b oade ade heo y. When conside ing he na ional scale, a widely accep ed
de ini ion, as a icula ed by he Wo ld Economic Fo um (WEF), de ines compe i i eness as
“ he se o ins i u ions, policies, and ac o s ha de e mine he le el o p oduc i i y o a
coun y” (Schwab, 2012; Schwab & Po e , 2007). This mo e adi ional pe spec i e
p edominan ly emphasizes economic ou pu and e iciency, wi h p oduc i i y iden i ied as he
p ima y engine o g ow h (Po e & Ke els, 2003; K ugman, 1996). This p oduc i i y ocus o
compe i i eness, is mainly due o a gene al consensus ha a na ion’s capaci y o enhance
li ing s anda ds is in insically linked o he e icien u iliza ion o i s esou ces,
encompassing human, capi al, and na u al asse s.
In spi e o his, we mus also men ion how Paul K ugman (1994) amously acknowledged he
di ec di e ences be ween na ional and i m-le el compe i i eness, a guing ha na ions o
coun ies, unlike i ms, do no ypically cease o exis due o compe i i e p essu es and “go
ou o business”.
Ne e heless, he concep o compe i i eness gains laye s o complexi y and becomes
inhe en ly mul idimensional when he analy ical lens shi s om he na ional o he egional
le el. Regional compe i i eness ope a es dis inc ly om a simple i m-le el agg ega ion
(mic oeconomic) and a scaled down coun y-le el (mac oeconomic) compe i i eness
(Ga dine e al., 2004), es ablishing i sel as a signi ican in e media e, o meso-economic,
laye .
A equen ly ci ed de ini ion o egional compe i i eness was he one de eloped by
Meye -S ame (2008), which desc ibes sys emic compe i i eness as “ he abili y o a locali y
o egion o gene a e high and ising incomes and imp o e he li elihoods o he people li ing
he e”. This de ini ion places egional p ospe i y ex emely close o compe i i eness, hus
b oadening i s scope beyond me e p oduc i i y aking in o accoun o he c ucial aspec s such
as “sus ainable g ow h” and i s capaci y o “enhance o e all s anda ds o li ing” (B is ow,
2005; Huggins, 2003). To isualize he mul i ace ed na u e o compe i i eness ac oss
di e en le els, Figu e 1 ( om Meye -S ame , 2008, p. 3) illus a es he di e se concep s i
encompasses.
7
Figu e 1. De e minan s o compe i i eness a di e en le els.
[Sou ce: Meye -S ame , 2008]
Gi en ha his s udy ocuses on Eu opean egions, he de ini ion de eloped by Dijks a e al.
(2011) p o ides a pa icula ly ele an amewo k. They de ine egional compe i i eness as
“ he abili y o a egion o o e an a ac i e and sus ainable en i onmen o i ms and
esiden s o li e and wo k.” This de ini ion highligh s he key ole o bo h economic and
social ac o s, encompassing quali y o li e, ins i u ional obus ness, and long- e m
sus ainabili y, while mo ing beyond he simple ocus on a egion’s economic pe o mance.
On he one hand, his de ini ion aligns wi h he inc easing c i icism ha he adi ional
app oach o compe i i eness has aced. Fo ins ance, Aiginge (2006) p oposed an al e na i e
model whe e compe i i eness could ac i ely con ibu e o social wel a e, inco po a ing
posi i e ex e nali ies like quali y o li e and social cohesion. In subsequen wo k, Aiginge &
Vogel (2015) ein o ced his in eg a ed pe spec i e, a guing ha compe i i eness should no
be a goal bu a means o ob ain goals o inclusi e and sus ainable g ow h, ul ima ely
enhancing he well-being o ci izens.
On he o he hand, his mo e comp ehensi e iew is also inc easingly e lec ed in Eu opean
Union policy documen s and a ious egional s udies. As an example, Camagni (2002)
in oduced he concep o “ e i o ial compe i i eness”, emphasizing he signi ican ole o
ac o s such as inno a ion ne wo ks, local go e nance s uc u es, and spa ial quali y.
Simila ly, Annoni & Dijks a (2019) ha e ecen ly demons a ed he subs an ial impac o
non-economic dimensions (including educa ion le els, in as uc u e de elopmen , and e en
digi al accessibili y) on egional pe o mance ac oss Eu ope.
All in all, hese e ol ing de ini ions collec i ely highligh a g owing consensus du ing he
las decades: compe i i eness is no solely abou maximizing p oduc ion o accele a ing
ou pu , bu a he abou achie ing hese goals in ways ha a e socially inclusi e,
8
en i onmen ally esponsible, and held up by s able ins i u ional amewo ks. A uly
compe i i e egion is one whe e businesses can lou ish, bu equally impo an ly, whe e
indi iduals a e a ac ed o li e, wo k, and in es in hei u u e.
The compe i i eness concep adop ed o he sake o his esea ch alls wi hin his b oad,
in eg a ed app oach. I di e s om he p ocedu es and de ini ions examining egions as small
coun ies o collec i e en e p ises compe ing solely on cos s, expo da a o b u e
p oduc i i y. I adhe es o an agenda whe eby inno a ion, sus ainabili y, and long- e m
e i o ial g ow h a e conside ed o be he essen ial ounda ions o egional p ospe i y and
compe i i eness. Such a holis ic de ini ion is pa icula ly ele an in compa ing egions such
as he Basque Coun y and Baden-Wü embe g, which ha e bo h pu sued compe i i eness
s a egies ha go beyond adi ional economic me ics.
2.2. Regional Benchma king: Founda ions, Types and Limi a ions
Regional benchma king, simila o he a o emen ioned idea o compe i i eness, owes i s
o igin o me hods concei ed in he business wo ld. I is he sys ema ic compa ison be ween
egions (simila o companies in business benchma king) wi h he in en ion o acqui ing good
p ac ices and o s ee s a egies owa ds enhancing egional pe o mance (Lund all &
Tomlinson, 2001). Al hough he e is no s anda d de ini ion, egional benchma king has been
de ined as a sys ema ic compa a i e lea ning app oach ha enables policy o mula ion and
egional de elopmen (Huggins, 2008). By quan i ying hei compa a i e posi ion o e
impo an dimensions—such as inno a ion, p oduc i i y, ins i u ional quali y, o indus ial
de elopmen — egions a e able o mo e ully unde s and hei weaknesses and s eng hs
(OECD, 2005) and use his in o ma ion when planning u u e policies (Na a o e al., 2011).
Essen ially, he p ac ice is unde pinned by he assump ion ha o he people's expe ience can
be used o lea n lessons, especially hose ha a e doing be e in ma e s o conce n. As
Papaioannou e al. (2006) emphasize, lea ning om o he s acili a es he ealiza ion o
s a egic gaps and o mula ing con ex -speci ic eac ions. Impo an ly, benchma king canno
be limi ed o nume ical compa isons; i mus ake in o accoun he ins i u ional, policy, and
socio-economic se ings ha suppo pe o mance di e ences (Huggins e al., 2013).
Among he mos signi ican me hodological ounda ions o success ul benchma king is he
compa abili y p inciple. As a gued by Papaioannou e al. (2006), compa ison is mos
e ec i e when i in ol es egions ha sha e simila challenges o s uc u al cha ac e is ics, in
di e en dimensions whe he i is indus ial composi ion, ins i u ional amewo k, economic
scale o simila e i o ies. Tha said, o he schola s (Balza , 2006) a gue ha unde ce ain
condi ions, egions can also lea n om hose wi h con as ing cha ac e is ics, p o ided ha
he di e ences a e well con ex ualised and in e p e ed ca e ully.
Benchma king is adi ionally oo ed in quan i a i e esea ch, ounded on indica o s and
ankings o ela i e pe o mance compa ison. Fo complex and mul idimensional
phenomena like egional compe i i eness, howe e , his app oach alone is no su icien .
Mos specialis s ag ee now ha a heal hy exe cise in benchma king mus ind a balance
9
3.2. Uni o Te i o ial Analysis: Conside a ions o NUTS 1 s. NUTS 2
Le els
A cen al me hodological decision o his egional compa ison is o choose he app op ia e
e i o ial uni o analysis. Acco ding o he Eu opean Union's s anda dized classi ica ion
sys em (NUTS), es ablished unde Regula ion (EC) No. 1059/2003, egions a e ypically
analysed a he NUTS 2 le el. In mos Eu opean coun ies, his le el co esponds o he
adminis a i e egions esponsible o egional go e nance and policy.
Howe e , excep ions exis , no ably in Ge many, he Uni ed Kingdom, and Belgium, whe e
egional policy compe ences a e si ua ed a he NUTS 1 le el. In Ge many’s case, he ede al
s a es (Lände ) o m he p ima y uni s o egional go e nance (Na a o e al., 2011).
Consequen ly, ollowing he me hodological app oach adop ed in he “Indicado es de
inno ación y benchma king” (Na a o e al., 2011) and he Regional Inno a ion Moni o
(Walendowski e al., 2011), his s udy will use NUTS 2 o he Basque Coun y and NUTS 1
o Baden-Wü embe g.
This poses a me hodological challenge, as he RCI 2.0 (Regional Compe i i eness Index)
p o ides da a only a he NUTS 2 le el. As a esul , he analysis o Baden-Wü embe g
equi es agg ega ing he da a om i s ou cons i uen NUTS 2 egions: S u ga , Ka ls uhe,
Tübingen, and F eibu g. To es ablish a compa able benchma k wi h he Basque Coun y, we
will calcula e he a i hme ic mean o hese ou sub egions, which will o e a gene al
o e iew o he egion’s compe i i e pe o mance. Howe e , o accoun o po en ial in e nal
a ia ion and iden i y any di e gen pa e ns, we will also examine he indi idual sco es o
each sub egion. This complemen a y analysis will help de e mine whe he he ou
sub egions ollow simila ends o i speci ic a eas s and ou in ways ha could be
analy ically ele an .
3.3. Da a Sou ces and Va iables: Analysis o he Regional Compe i i eness
Index (RCI 2.0) 2016, 2019, and 2022
The quan i a i e da a in his s udy will be de i ed om he mos ecen and i h edi ion o he
Eu opean Regional Compe i i eness Index (RCI) (Dijks a e al., 2023). This la es RCI
epo b eaks down ecen igu es and ecalcula es numbe s using he new RCI 2.0 indica o
o he yea s 2016, 2019, and 2022. Wi h he choice o hese h ee poin s in ime, he
examina ion will p o ide a consis en and compa able me hod o analyze he Basque Coun y
and Baden-Wü embe g's compe i i e pe o mance o e ecen yea s. Selec ion o such a
ime pe iod is necessa y due o he a ailabili y o ha monized and e-calib a ed indica o s,
hus ensu ing ha c oss- egion compa isons a e obus and eliable.
In addi ion o he RCI 2.0 da ase , his p ojec will also u ilize wo o he quan i a i e da a
sou ces ha will p o ide complemen a y e idence. Fi s , he his o ical egional GDP and
popula ion da a om Roses and Wol (2020) will be used o b ie ly summa ize he long e m
economic pa hs o he wo egions o he 20 h cen u y based on hei ela i e posi ion. The
GDP da ase will no only be used o his pu pose, bu we will also ex ac da a speci ic o
16

sec o al employmen —in pa icula , he pe cen age o employmen in indus y. This da ase
will p o ide con ex o he weigh and e olu ion o indus ial ac i i y wi hin each egion,
while p o iding a obus e idence base o ein o ce ou in e p e a ion o s uc u al change
p ocesses o e ime. Inno a ion capaci y will also be assessed using he Regional Inno a ion
Sco eboa d 2023, which p o ides upda ed indica o s o egional inno a ion pe o mance and
classi ica ion wi hin he Eu opean Union (la es a ailable da a). The addi ional da ase s will
be pa icula ly ele an o he con ex ual o e iew in sec ion 4.1, while also con ibu ing o
u he suppo o ou compa a i e analysis p esen ed in he ollowing sec ions.
3.4. Complemen a y Quali a i e Da a and Analysis
In o de o complemen hese quan i a i e indings, his esea ch will inco po a e a quali a i e
analysis based on a a ie y o sou ces, including academic li e a u e, his o ical epo s and
policy documen s ha ace majo de elopmen s and policy ini ia i es in bo h he Basque
Coun y and Baden-Wü embe g. This quali a i e dimension will allow o a deepe
unde s anding o he b oade his o ical and s uc u al dynamics ha ha e shaped each
egion’s compe i i eness o e ime.
While he quan i a i e analysis will pu g ea e ocus on he pe iod 2016–2022, he quali a i e
s udy will ace he e olu ion o indus ial ends and policy en i onmen s o e he pas
decades. This b oade his o ical scope is equi ed o accoun o long- e m shi s and o pu
con empo a y compe i i e posi ioning o each egion in o pe spec i e.
In pa icula , he analysis will conside he Basque Coun y's indus ial change, emphasizing
key ends, impo an ans o ma ions, and long-s anding challenges ha ha e cha ac e ized
i s economic ajec o y. Simila ly, a compa a i e analysis will be conduc ed o
Baden-Wü embe g, wi h pa icula emphasis on he d i e s o success and adap a ion
mechanisms ha ha e encou aged i s sus ained indus ial compe i i eness.
Fu he mo e, he s udy will p o ide a compa a i e analysis o he s uc u al, ins i u ional, and
socioeconomic ac o s ha di e en ia e o liken he wo egions, wi h a pe spec i e o be e
unde s anding he con ex ual de e minan s o hei compa a i e pe o mances. This will be
complemen ed by an o e iew o key policies and ac ions implemen ed in bo h egions o
build indus ial compe i i eness, including policies o s imula e inno a ion, indus ial
mode niza ion, and in e na ionaliza ion.
On he whole, he quali a i e analysis will a emp o ex ac po en ial policy lessons o he
Basque Coun y om he expe ience o Baden-Wü embe g. Ra he han sugges ing di ec
eplica ion, he goal will be o iden i y s a egic implica ions and bes p ac ices ha could
in o m u u e egional de elopmen s a egies, aking in o accoun he speci ic cha ac e is ics
and capaci ies o he Basque con ex . By combining his long- e m quali a i e pe spec i e
wi h ecen quan i a i e analysis, he s udy seeks o o e a comp ehensi e unde s anding o
egional compe i i eness dynamics, b idging he his o ical oo s o indus ial ans o ma ion
wi h con empo a y pe o mance ou comes.
17
3.5. Me hodological Limi a ions and Challenges
Like all compa a i e egional s udies, his analysis is ine i ably con on ed wi h ce ain
me hodological limi a ions which mus be acknowledged. Needless o say, i will no be
easible o ea all policies, o ganisa ional e o ms, and compe i i eness indica o s o he
Basque Coun y and Baden-Wü embe g. Thus, he analysis shall con ain some
o e simpli ica ion by na u e, including p ominen ends and impo an policy s eps bu no
a emp ing o pe o m an exhaus i e analysis o all possible in luences.
Benchma king exe cises hemsel es a e ex emely complex, especially in he case o
compa ing egions ha , hough s uc u ally e y simila in many ways, emain dissimila in
signi ican espec s. Though he Basque Coun y and Baden-Wü embe g we e chosen by
accep ed p ocedu es o de e mining compa able egions (Na a o e al., 2011), economic
size, ins i u ional a angemen s, and poli ical ci cums ances ine i ably shape bo h hei
expe iences and he applicabili y o pa icula policy lessons. Such con ex ual a ia ion
ensu es ha indings ha e o be ea ed cau iously and subjec o ai ly sub le compa isons.
The use o he Regional Compe i i eness Index (RCI) 2.0 as he main quan i a i e ool also
has some limi a ions. Al hough he RCI 2.0 o e s a aluable, s anda dized ool o assessing
egional compe i i eness, i s applica ion o agg ega ed indica o s may ac ually smoo h o e
conside able in e nal dispa i ies wi hin egions. This is especially he case o
Baden-Wü embe g, whe e he analysis is based on he a e age o i s ou NUTS 2
egions—po en ially masking di e ences in economic pe o mance o policy impac s ac oss
di e en sub egional egions.
Also, while he quan i a i e da a ocus on he yea s 2016, 2019, and 2022, he quali a i e
analysis looks u he a ield o ch onicle he longe - un indus ial and ins i u ional e olu ion
o each egion. This is an asymme y in ime ho izons be ween he wo me hods ha may
p o oke ension when syn hesizing indings, bu also deepens he analysis by p o iding a
iche unde s anding o his o ical ajec o ies behind cu en compe i i eness ou comes.
On he whole, despi e hese cons ain s, in eg a ing quan i a i e and quali a i e me hods
p o ides a iche and mo e de ailed pic u e han ei he could indi idually. Acknowledging he
limi s o his esea ch pe mi s a mo e conse a i e and c i ical eading o he esul s, while
also allowing subsequen esea ch o add o and e ine he indings de eloped in his wo k.
4. Compa a i e Analysis o Regional Compe i i eness
4.1. O e iew o Economic De elopmen T ajec o ies and Cu en Posi ion
o he Basque Coun y and Baden-Wü embe g
Be o e engaging in a compa a i e analysis o compe i i eness s a egies, i is use ul o ou line
he b oad economic ajec o ies o he Basque Coun y and Baden-Wü embe g o e he 20 h
cen u y, as well as hei cu en economic and inno a ion s anding wi hin he Eu opean
landscape.
18
The long- e m da a compiled by Roses and Wol (2020) on GDP, popula ion and employmen
sha e o indus y ac oss Eu opean egions om 1900 o 2015 p o ides a use ul pe spec i e.
Baden-Wü embe g consis en ly s ood among he mos p ospe ous and indus ialised egions
in Eu ope h oughou he 20 h cen u y. I s economy bene i ed ea ly om Ge many’s s ong
manu ac u ing base and in eg a ion in o global ma ke s. In con as , he Basque Coun y,
while also highly indus ialised by Spanish s anda ds, ollowed a mo e une en pa h, ma ked
by pe iods o s agna ion and lowe g ow h du ing F anco's dic a o ship, and a as e g ow h
a e he 1990s.
Figu e 3. E olu ion o egional GDP pc
[Sou ce: Roses-Wol da abase, 2020]
Looking a cu en indica o s (G aph 1), bo h egions display obus economic p o iles, albei
wi h no able di e ences. In e ms o GDP pe capi a (adjus ed o pu chasing powe ), he
Basque Coun y emained ahead o Baden-Wü embe g un il a ound 1937. F om ha poin ,
Ge many began o g ow mo e apidly, and a e 1950 Baden-Wü embe g expe ienced much
as e economic expansion, main aining a highe le el han he Basque Coun y up o he
p esen . This e lec s i s ad anced indus ial ecosys em and expo -o ien ed model.
19
Figu e 4. Sha e o Indus y and Mining in To al Employmen .
[Sou ce: Roses-Wol da abase, 2020]
Rega ding he pe cen age o employmen in indus y (G aph 2), bo h egions show a simila
end, wi h a s eady inc ease un il 1980, ollowed by a signi ican decline o e he subsequen
decades. In e ms o inno a ion capaci y, he 2023 edi ion o he Regional Inno a ion
Sco eboa d classi ies all ou NUTS-2 egions o Baden-Wü embe g as ei he "Leade " o
"S ong +" inno a o s, wi h Ka ls uhe achie ing one o he highes sco es in he EU (142.4,
anked 7 h) (Eu opean Commission, 2023). The Basque Coun y, meanwhile, is ca ego ised
as a “S ong Inno a o ” wi h a sco e o 109.8, placing i in he uppe hal o EU egions
(72nd). While his e lec s a solid inno a ion in as uc u e, i also highligh s a compe i i e
gap wi h he leading inno a ion egions in Sou he n and Cen al Eu ope (Eu opean
Commission, 2023).
Table 2. Key Economic and Inno a ion Indica o s 2023
Uni
Baden Wu embe g
Basque Coun y
GDP pc
EUR
54 339
39.547
Popula ion
1000
11 339
2.196
Inno a ion Index
RII Punc ua ion
131,1
109,8
R&D: Expense/GDP
% GDP
5,6
2,16
[Sou ce: Eus a , Minis y o Economic A ai s, Labou and Tou ism o Baden-Wü embe g,
Eu opean Commission]
As Table 2 clea ly shows, Baden-Wü embe g main ains a signi ican lead in GDP pe capi a,
e lec ing i s highly p oduc i e and expo -o ien ed economy, e en wi h a much la ge
popula ion. The egion also demons a es a conside ably highe Inno a ion Index sco e and a
20
no ably la ge R&D expendi u e as a pe cen age o GDP. This s ong commi men o esea ch
and de elopmen unde sco es i s posi ion as a global inno a ion leade . While he Basque
Coun y shows obus igu es, pa icula ly in i s GDP pe capi a o i s size, and a solid
Inno a ion Index ha places i as a "S ong Inno a o ," hese cu en da a poin s con i m he
compe i i e gap wi h Baden-Wü embe g, pa icula ly in he in ensi y o i s inno a ion
ecosys em and i s economic ou pu pe pe son.
These dispa i ies in bo h his o ical de elopmen and cu en pe o mance a e impo an o
keep in mind when assessing he ins i u ional amewo ks, indus ial policies, and inno a ion
s a egies o he wo egions in he sec ions ha ollow.
4.2. E olu ion and Compa ison o he O e all RCI Sco es: Basque Coun y
and Baden-Wü embe g (2016-2022)
The e olu ion o he Regional Compe i i eness Index (RCI) sco es be ween 2016 and 2022
o e s aluable insigh s in o he compa a i e dynamics be ween he Basque Coun y and
Baden-Wü embe g. Al hough bo h egions consis en ly demons a e s ong compe i i eness
wi hin he Eu opean amewo k, hei ajec o ies o e he pas yea s e eal meaning ul
pa e ns ha me i de ailed e lec ion.
In 2016, Baden-Wü embe g displayed an excep ional o e all RCI sco e o 136.4,
signi ican ly su passing he Basque Coun y's sco e o 102.7. This ini ial gap o o e 33
poin s e lec ed he s uc u al ad an ages o he Ge man egion, adi ionally ecognized o
i s s ong indus ial base, wo ld-class inno a ion ecosys em, and highly de eloped
in as uc u e.
O e he ollowing yea s, howe e , an in e es ing end un olded. By 2019,
Baden-Wü embe g's o e all sco e dec eased sligh ly o 127.6, and hen u he o 120.0 in
2022. Meanwhile, he Basque Coun y exhibi ed a ela i ely s eady upwa d p og ession: i s
RCI sco e dec eased om 104.9 in 2016 o 102.7 in 2019, and ul ima ely ose o 107.0 in
2022.
This dynamic is isually summa ized in Figu e 5 below, whe e we obse e wo key
phenomena: a mode a e decline in Baden-Wü embe g's sco es, and a g adual imp o emen
in hose o he Basque Coun y.
21

Figu e 5. EU Regional Compe i i eness Index 2.0 -2022 edi ion o BW and PV Sco es
(2016–2022)
[Sou ce: Own elabo a ion based on Eu opean Commission RCI 2022 Repo ]
While he Basque Coun y’s absolu e sco e emains lowe in compa ison, he end owa d
con e gence is clea . The gap be ween he wo egions na owed om 33.7 poin s in 2016 o
jus 13 poin s in 2022. Impo an ly, his con e gence does no eme ge om an ex ao dina y
leap in Basque compe i i eness, bu a he om a combina ion o mode a e Basque
imp o emen and ela i e decline o s abiliza ion a e y high le els by Baden-Wü embe g.
Se e al ac o s may explain hese de elopmen s. Fo Baden-Wü embe g, s uc u al
sa u a ion could pa ly accoun o he sligh down u n. Being al eady one o Eu ope’s mos
compe i i e egions, ma ginal imp o emen s become inc easingly di icul ("diminishing
e u ns" e ec ). Mo eo e , ex e nal shocks (such as he COVID-19 pandemic and dis up ions
in global supply chains) may ha e disp opo iona ely impac ed highly indus ialized
expo -d i en economies like Baden-Wü embe g.
Con e sely, he Basque Coun y appea s o ha e bene i ed om s eady, hough modes ,
enhancemen s ac oss key a eas o compe i i eness. Imp o emen s in labou ma ke
e iciency, educa ion, and inno a ion capaci y, combined wi h a esilien indus ial sec o ,
likely con ibu ed o his posi i e e olu ion. Addi ionally, a ge ed egional policies aligned
wi h he Sma Specialisa ion S a egy (RIS3 Euskadi) may ha e g adually ein o ced
s uc u al s eng hs o e his pe iod.
22
Howe e , i is c ucial o in e p e hese esul s ca e ully, o a oid d awing ea ly conclusions.
Despi e he na owing gap, Baden-Wü embe g s ill main ains a clea compe i i e edge. I s
sco e, al hough sligh ly lowe han in p e ious yea s, emains subs an ially highe han he
EU a e age and e lec s p o ound s uc u al ad an ages ha a e no easily e oded. The
Basque Coun y's ca ching-up is encou aging, bu i does no imply pa i y; signi ican
di e ences emain in dimensions such as ma ke size and inno a ion in ensi y, as will be
analysed in subsequen sec ions.
Thus, i can be concluded ha om 2016 o 2022 we encoun e a scena io o ela i e
con e gence, d i en by he s abiliza ion o a op pe o me and he g adual imp o emen o a
mid- ie egion. These di e en dynamics highligh he complexi y o benchma king
exe cises: i is no only he absolu e sco es ha ma e , bu also he unde lying ajec o ies,
con ex s, and s uc u al eali ies shaping egional compe i i eness o e ime.
4.3. Compa a i e Analysis o he 11 RCI Sub-indices: Iden i ying S eng hs
and Weaknesses
To complemen he analysis o he o e all RCI sco es, i is essen ial o examine he ele en
sub-indices ha decompose egional compe i i eness in a mo e de ailed and g anula way.
These dimensions allow us o be e unde s and he speci ic a eas whe e each egion excels o
encoun e s g ea e challenges.
Fo his pu pose, he ollowing able summa izes he pe o mance o Baden-Wü embe g and
he Basque Coun y in each sub-index o he yea s 2016, 2019, and 2022. Addi ionally,
Figu e 6 p o ides a isual compa ison o he 2022 sco es o each o he ou NUTS-2
egions o Baden-Wü embe g, he Basque Coun y, and he EU a e age, allowing o a mo e
in ui i e unde s anding o hei ela i e posi ions.
Table 3. E olu ion o RCI 2.0 11 pilla s sco e (2016–2022)
Pila
Baden-Wü
embe g
2022
País Vasco
2022
Baden-Wü
embe g
2019
País Vasco
2019
Baden-W
ü embe
g 2016
País Vasco
2016
RCI 2.0 O e all
120.0
107.0
127.6
104.9
136.4
102.7
Basic Sub-index
118.7
103.4
126.1
98.6
133.1
92.8
Ins i u ions Pilla
125.4
115.7
142.6
108.1
142.8
95.8
Mac oeconomic
S abili y Pilla
136.7
78.1
143.7
71.9
147.5
66.8
In as uc u e
Pilla
113.9
115.6
117.9
95.6
158.9
39.6
Heal h Pilla
110.4
117.2
111.6
118.2
114.6
119.5
23
Basic Educa ion
Pilla
110.4
92.5
117.2
95.1
121.6
108.0
E iciency
Sub-Index
124.7
105.6
127.4
104.6
135.3
117.5
Highe Educa ion
and LLL Pilla
104.3
126.9
110.4
123.8
116.4
149.0
Labou Ma ke
E iciency Pilla
124.1
95.3
121.4
89.2
132.1
101.7
Ma ke Size
Pilla
162.6
89.4
164.5
102.3
166.0
103.5
Inno a ion
Sub-Index
117.0
117.1
133.2
105.8
141.8
106.3
Technological
Readiness Pilla
105.7
135.2
136.2
105.5
141.8
105.2
Business
Sophis ica ion
Pilla
101.6
93.0
120.3
88.3
108.5
102.3
Inno a ion Pilla
148.0
118.8
142.0
123.4
180.1
112.9
Sou ce: Own elabo a ion based on Eu opean Commission RCI 2022 Repo .
A de ailed examina ion o he sub-index da a om 2016 o 2022 e eals clea and pe sis en
pa e ns be ween Baden-Wü embe g and he Basque Coun y, as well as some in e es ing
shi s o e ime.
Looking in o Ins i u ions, Baden-Wü embe g s ill leads, bu i s sco e has d opped
signi ican ly ( om 142.8 in 2016 o 125.4 in 2022) sugges ing g owing go e nance
challenges. In con as , he Basque Coun y shows imp o emen , ising om 95.8 o 115.7,
which may e lec ins i u ional consolida ion a he egional le el.
Mac oeconomic S abili y emains one o he mos s uc u al di isions be ween he wo
egions. Baden-Wü embe g anks ex emely well in his dimension h oughou , om 147.5
in 2016 o 136.7 in 2022, e lec ing Ge many's classic mac oeconomic s eng h, iscal
conse a ism, and c edibili y. In con as , he Basque Coun y anks signi ican ly lowe , unde
80 in all h ee yea s— om 66.8 in 2016 o 78.1 in 2022. This gap does no , howe e , e lec
unde pe o mance a he egional le el. The RCI calcula es mac oeconomic a iables based
on na ional da a, he e o e, he Basque Coun y "inhe i s" he o e all mac oeconomic
ins abili y o Spain, which has his o ically su e ed om highe deb , highe budge de ici s,
and g ea e in la iona y p essu es. Baden-Wü embe g, in con as , bene i s om he o e all
mac oeconomic heal h o Ge many. This indica es one o he inhe en limi a ions o
subna ional benchma king: ce ain pilla s a e subjec o na ional in luences ha a e no unde
he immedia e con ol o subna ional go e nmen s, which in oduces dis o ions when
compe i i eness is ead ac oss a he subna ional le el.
24
The In as uc u e Pilla b ings a su p ising and in e es ing e e sal be ween he wo egions.
While Baden-Wü embe g enjoyed a b oad ma gin in 2016, when i egis e ed 158.9, i s
sco e has allen s eadily h oughou he yea s o 113.9 in 2022. The Basque Coun y, on he
o he hand, has p og essed s eadily, om 39.6 in 2016 o 115.6 in 2022, and consequen ly
su passed i s Ge man compe i o in he la es yea . This end can possibly e lec ecen
egional in es men in p io i y in as uc u e a eas such as sus ainable mobili y, ene gy
e iciency, and digi al connec i i y. I is also likely ha EU cohesion unding and local
de elopmen s a egies (including "sma ci y" ini ia i es and he consolida ion o ail and
po ne wo ks) ha e had an impac in his ega d. Con e sely, Baden-Wü embe g’s decline
may be due o ageing in as uc u e o insu icien ein es men , he e o e a ec ing egional
logis ics and long- e m p oduc i i y.
Rega ding he Heal h Pilla , he Basque Coun y ou pe o ms consis en ly, sco ing abo e 117
in e e y yea , while Baden-Wü embe g emains s able bu lowe , a ound 110. This e lec s
he Basque egion’s adi ionally s ong public heal h sys em and wel a e o ien a ion.
Fo Basic Educa ion, he end is e e sed. Baden-Wü embe g has emained abo e 110
ac oss all h ee yea s, while he Basque Coun y shows i egula pe o mance—peaking a
108.0 in 2016 bu alling again o 92.5 in 2022.
The E iciency Sub-index, combining Highe Educa ion, Labou Ma ke E iciency, and
Ma ke Size, again shows Baden-Wü embe g in he lead, hough i declined om 135.3 in
2016 o 124.7 in 2022. The Basque Coun y's sco e d opped om 117.5 in 2016 o 105.6 in
2022, indica ing inc easing di e gence.
Wi hin he Highe Educa ion and Li elong Lea ning Pilla , he Basque Coun y consis en ly
bea s Baden-Wü embe g and s ands as a Eu opean leade . Wi h a ema kable peak o 149.0
in 2016 and s ill main aining 126.9 in 2022, Euskadi clea ly excels in human capi al building.
These esul s indica e a s able and well-o ganized oca ional educa ion and aining (VET)
sys em, consis ency o suppo o li elong lea ning, and ac i e in e ac ion be ween educa ion
p o ide s and he local indus y. The p ac icabili y o his app oach has been s ongly a gued
in esea ch li e a u e and by global ins i u ions such as he OECD. Baden-Wü embe g, while
s ill doing ai ly well (be ween 104 and 116), is lagging in his ega d. This migh seem
pa adoxical as he egion demons a es g ea compe i i eness in o he dimensions like
indus ial inno a ion. In his case, his shows ha he Basque model o skills o ma ion based
on coo dina ion and e i o ial s a egy is showing eal compe i i e payo s.
Labou Ma ke E iciency, howe e , ells a di e en s o y. Baden-Wü embe g has
main ained high pe o mance (124.1 in 2022), while he Basque Coun y has s uggled,
d opping om 101.7 in 2016 o 95.3 in 2022. The empo a y peak in 2016 may ha e been
ela ed o pos -c isis employmen eco e y, bu he la es igu es sugges linge ing igidi ies o
misma ches in he labou ma ke .
Ma ke Size con inues o be an ongoing s uc u al cons ain o he Basque Coun y. O e all
h ee yea s, he egion is below 105, alling om 103.5 in 2016 o 89.4 in 2022.
25
equi y, en i onmen al sus ainabili y, and ecip ocal p ospe i y (Gobie no Vasco, 2019). I
ins alls a e i o ial de elopmen logic whe ein he economic pe o mance elies upon
go e nance quali y, lea ning ins i u ions, and social in ol emen . This is he u u e ha is
buil on he ins i u ional pilla s, e alua ion quali y, and coope a i e e hos cul i a ed o e he
pas decade. As he egion ansi ions in o an e a o en i onmen al change, echnological
uphea al, and demog aphic p essu e, i s abili y o change will be as much a unc ion o
p uden policy as i will be o s aying g ounded in a common sense o pu pose o co-c ea ing
a s ong, inclusi e, and inno a ion-d i en u u e.
5.2. Indus ial E olu ion in Baden-Wü embe g: Key T ends,
T ans o ma ions, and Success Fac o s
In con as o he Basque Coun y’s expe ience o ab up s uc u al ans o ma ion du ing he
la e 20 h cen u y, Baden-Wü embe g has ollowed a mo e s able and pa h-dependen
ajec o y since he pos -Wo ld Wa II pe iod. As one o Ge many’s weal hies and mos
indus ialised egions, i bene i ed ea ly on om he eme gence o a dense ne wo k o small
and medium-sized en e p ises (SMEs)— he enowned Mi els and—suppo ed by s ong
oca ional educa ion sys ems and a his o ically close alignmen be ween indus y, public
policy, and applied esea ch ins i u ions (Heiden eich, 2004). This p oduc ion model has
allowed he egion o main ain global compe i i eness h ough inc emen al inno a ion a he
han dis up i e o e hauls (Heinze & Schmid, 1996).
The economic s uc u e o Baden-Wü embe g con inues o ely hea ily on a highly
di e si ied and expo -o ien ed manu ac u ing base, cha ac e ised by echnological
sophis ica ion, deep sec o al specialisa ion, and embeddedness in global alue chains (Cooke,
2001; Eh ha d & Nowak, 2011). Majo indus ial playe s such as Daimle , Bosch, and SAP
coexis wi h housands o highly specialised SMEs, many o which domina e global niche
ma ke s and p io i ise long- e m s a egy, p oduc quali y, and con inuous inno a ion
(Ge many Wo ks, 2023). These i ms ope a e wi hin dense egional ecosys ems, whe e
collabo a ion wi h uni e si ies, esea ch cen es, and public agencies is bo h ou ine and
ins i u ionalised—a dis inc i e ea u e o wha schola s ha e e med he egion’s “inno a ion
egime” (Heiden eich, 2004).
This collabo a i e ab ic is u he ein o ced by he s a e’s longs anding commi men o
clus e policies. Since he ea ly 2000s, Baden-Wü embe g has ac i ely p omo ed he
de elopmen o s a egic clus e s in ields such as mobili y, medical echnology,
mic oelec onics, and en i onmen al inno a ion. These ini ia i es a e no jus sec o al
concen a ions bu pla o ms o coo dina ed ac ion be ween i ms, esea ch ins i u ions, and
public ac o s (Baden-Wü embe g Minis y o Economic A ai s, 2024). The
RegioClus e Agen u exempli ies his coo dina ed app oach, ac ing as an in e media y o
s eng hen inno a ion po en ial, os e c oss-sec o al lea ning, and ensu e he s a egic
cohe ence o egional e o s (In e eg Eu ope, 2024).
32

In ecen yea s, he egion has also posi ioned i sel as a pionee in he de elopmen o
Indus y 4.0. Th ough he “Wi scha 4.0 Baden-Wü embe g” s a egy and ins i u ions such
as Allianz Indus ie 4.0, he s a e has p o ided dedica ed suppo o SMEs o adop digi al
echnologies—o e ing consul ancy se ices, unding, and aining p og ammes (Indus ie 4.0
BW, 2023). These policies e lec a sys emic app oach ha in eg a es echnology adop ion
wi h b oade ans o ma ion in skills, o ganisa ional models, and in e - i m coope a ion.
A majo pilla o his model is he esea ch and alen in as uc u e, which includes
wo ld-class uni e si ies, applied science ins i u ions, and in e na ionally ecognised esea ch
o ganisa ions such as F aunho e , Max Planck, and Helmhol z. Thei wo k is closely aligned
wi h indus y needs and s a egically coo dina ed h ough pla o ms like he
Inno a ionsallianz Baden-Wü embe g (innBW, 2023). Flagship p ojec s such as Cybe
Valley—a globally leading AI esea ch clus e —ha e u he ein o ced he egion’s capaci y
o ansla e scien i ic excellence in o indus ial ad an age.
Unde pinning all o his is a dis inc i e go e nance model ha combines long- e m s a egic
di ec ion wi h s ong local ancho ing. The s a e go e nmen , while p o iding mac o-le el
leade ship, collabo a es closely wi h local au ho i ies, chambe s o comme ce, and indus y
associa ions in a o m o meso-co po a is coo dina ion (Heinze & Schmid, 1996). Inno a ion
go e nance is hus dis ibu ed ac oss public, p i a e, and academic sec o s, enabling lexible
and esponsi e policymaking capable o add essing s uc u al challenges and ex e nal
shocks—as demons a ed in esponses o he COVID-19 pandemic and ongoing ene gy
unce ain ies.
Ul ima ely, Baden-Wü embe g’s indus ial esilience is oo ed in a combina ion o ac o s: a
di e si ied SME base embedded in expo ma ke s; sus ained in es men in esea ch and
de elopmen consis en ly exceeding 5% o egional GDP acco ding o Expänd (2025); dense
inno a ion and educa ional ne wo ks; and a go e nance sys em ha ensu es policy con inui y
and inclusi eness. Howe e , his model also aces moun ing p essu es. The egion mus now
con on he challenge o deca bonising i s indus ial base, accele a ing digi alisa ion in
adi ional sec o s, and add essing a g owing skills sho age—all wi hin an inc easingly
ola ile global en i onmen .
In esponse, Baden-Wü embe g has begun o shi emphasis owa d ene gy ansi ion,
li elong lea ning, and sus ainabili y-d i en inno a ion, while ein o cing i s collabo a i e and
ecosys em-based app oach o economic de elopmen (The LÄND, 2023). These e ol ing
p io i ies e lec he egion’s con inued e o o emain compe i i e while na iga ing he
complexi ies o indus ial ans o ma ion.
5.3. Iden i ica ion o Po en ial Lessons o he Basque Coun y om he
Baden-Wü embe g Expe ience
While he Basque Coun y and Baden-Wü embe g di e signi ican ly in size, ins i u ional
con ex , and his o ical de elopmen , he compa a i e analysis ca ied ou in his s udy inds a
33
numbe o policy p inciples and s a egic app oaches ha can be use ul lessons o he Basque
egion. These lessons a e no mean o be accep ed unc i ically; a he , hey a e p esen ed as
po en ial poin s o e lec ion, on he basis o he s uc u al con e gences and sha ed indus ial
ambi ions o bo h egions.
Imp o ing Knowledge T ans e and Applied Resea ch
One o he mos de ining aspec s o Baden-Wü embe g's success has been i s abili y o ake
scien i ic esea ch and make i indus ial inno a ion, no ably ia he F aunho e Socie y and
he S einbeis Founda ion (Cooke, 2001). The o ganisa ions a e mas e s a c ossing he
bounda y be ween academic esea ch and exploi a ion o p o i , pa icula ly o SMEs.
While Basque Coun y does ha e an ad anced in as uc u e o applied esea ch h ough
ins i u ions such as Tecnalia, IKERLAN, and IDEKO, he e may be oppo uni ies o pu sue
u he he de elopmen o o malized, es ablished uni s ocused speci ically on apid
echnology ans e and inno a ion suppo se ices o SMEs, a leas in less ad anced
ma ke s o in pe iphe al egions.
Expanding he Role o Dual Voca ional T aining Educa ion
Ge many's dual VET sys em is widely ega ded o be one o he p ima y d i e s o i s
indus ial migh . I gi es a eliable supply o echnically quali ied labo ia an a angemen
which combines class oom educa ion wi h in-company aining.
The Basque Coun y has made signi ican p og ess in e o ming i s oca ional aining sys em
and coo dina ing i wi h he demands o indus y (Mujika & In xaus i, 2018). Ye he
long-es ablished, well- oo ed VET sys em o Baden-Wü embe g can also su ely ha e use ul
lessons o impa on how o b ing SMEs mo e ully in o aining ne wo ks and ad ance
li elong lea ning in he ace o echnological and demog aphic change.
Enhancing SME Engagemen in G een and Digi al T ansi ions
Baden-Wü embe g has con inuously demons a ed p oac i e e o s o encou age SMEs o
adop Indus y 4.0 echnology and mo e owa d sus ainabili y (such as wi h he "Wi scha
4.0" p og am). This app oach has been a i al cha ac e is ic o i s compe i i eness s a egy in
he las ew yea s.
Gi en he Basque Coun y's obus indus ial base and high sha e o SMEs, expanding cu en
p og ams o suppo i ms o digi alize ope a ions, imp o e ene gy e iciency, and ad ance
owa ds EU G een Deal goals migh be an e ec i e pa h. Lessons om Baden-Wü embe g's
a ge ed ou each, especially o small i ms in legacy sec o s, migh in o m policy design and
deli e y mechanisms in he Basque con ex .
P io i ising Long-Te m, Adap i e Policy F amewo ks
34
Baden-Wü embe g’s success in econ igu ing indus ial policy wi hou losing long- e m
s a egic con inui y is c ucial, and emphasizes he need o adap i e policy ames condi ioned
by sha ed p io i ies and ins i u ionally embedded us . Indeed, he Basque Coun y's own
changes in ecen decades, as illus a ed in RIS3 s a egy and i s mo e gene al model o
inclusi e compe i i eness, ollowed simila p inciples. Ye  in an e e mo e unce ain and
dynamic wo ld, he e is a clea equi emen o ake o wa d mo e sys ema ic me hodologies
o con inuous lea ning, mul i ac o e alua ions and an icipa o y go e nance. S eng hening
hese dimensions could help sa egua d he egion’s compe i i eness s a egy, building on he
kind o long- e m esilience demons a ed by Baden-Wü embe g (A angu en e al., 2021;
Mo gan e al., 2020).
All in all, al hough i is no app op ia e o mechanically ans e Baden-Wü embe g’s
ins i u ional and indus ial se -up, i s con inued ocus on long- e m policy coo dina ion,
p omo ion o SMEs, de elopmen o he wo k o ce and applied inno a ion p o ides use ul
inspi a ion. Fo he Basque Coun y, hese lessons se e mo e as inspi a ion han as a model
o copy: an inspi a ion o s eng hen and ampli y exis ing compe ences, o s anda dize he
eme ging ones and o in eg a e hem in a mo e e ec i e way in o a e i o ial
s a egy di ec ed owa ds he u u e.
6. Conclusions
6.1. Summa y o Key Findings om he Compa a i e Analysis
This esea ch has unde aken an ex ensi e benchma king analysis o he Basque Coun y and
Baden-Wü embe g o explo e how wo s uc u ally simila Eu opean egions ha e add essed
he challenge o sus aining indus ial compe i i eness in con as ing ins i u ional and
his o ical con ex s. The s udy combined quan i a i e and quali a i e app oaches, ancho ed in
he Eu opean Commission’s RCI 2.0 index, and examined con ex ual de elopmen s om he
1980s o he p esen day.
The quan i a i e analysis encompassed GDP pc e olu ion and employmen sha e o indus y
e olu ion o e he las cen u y, bu mainly ocused on he 2016, 2019, and 2022 RCI sco es,
including bo h o e all compe i i eness and i s ele en sub-pilla s. These enabled a
mul idimensional compa ison ac oss domains such as inno a ion, educa ion and aining,
labou ma ke e iciency, echnological eadiness, in as uc u e, and ins i u ional quali y.
Baden-Wü embe g consis en ly ou pe o med he Basque Coun y in mos
indica o s—pa icula ly in inno a ion and echnological domains—showing con inui y and
excellence in hese a eas. The Basque Coun y, while no ma ching hese le els, demons a ed
solid pe o mance in a eas such as heal h, echnological eadiness, and educa ion, sugges ing
a model ha is di e en ia ed a he han in e io .
The quali a i e compa a i e analysis p o ided insigh s in o he ins i u ional, policy, and
socioeconomic dynamics unde pinning hese sco es. Baden-Wü embe g ep esen s a
pa adigma ic case o coo dina ed indus ial go e nance, cha ac e ised by long-s anding
meso-co po a is ins i u ions, a s ong oca ional educa ion sys em, and highly e ec i e
35
inno a ion in e media ies such as he F aunho e and S einbeis ne wo ks. I s clus e policy is
embedded in adi ions o coope a ion be ween indus y, go e nmen , and academia.
In con as , he Basque Coun y unde wen a mo e ecen p ocess o ans o ma ion ollowing
he indus ial c isis o he ea ly 1980s. Bene i ing om egional au onomy a e F anco's
dic a o ship pe iod, he Basque Go e nmen led a long- e m s a egy ha combined clus e
de elopmen , indus ial enewal, and ins i u ional inno a ion. The adop ion o he RIS3
app oach u he aligned esea ch, en ep eneu ship, and policy unde a sha ed s a egic
amewo k.
O e all, he compa a i e analysis shows ha egional compe i i eness eme ges om locally
g ounded, pa h-dependen p ocesses. The Basque model, despi e i s smalle scale and mo e
pe iphe al posi ion, demons a es adap i e capaci y and s a egic cohe ence, pa icula ly
h ough inclusi e go e nance and he abili y o sus ain long- e m ision. The case o
Baden-Wü embe g highligh s he impo ance o us -based coo dina ion, sus ained
in es men in skills and inno a ion, and obus ins i u ional in as uc u e. Bo h cases
ein o ce he idea ha compe i i eness is no only abou economic pe o mance bu also abou
ins i u ional quali y and go e nance.
6.2. Implica ions and Conside a ions o he Basque Con ex
While his s udy does no seek o p esc ibe o e alua e speci ic policy in e en ions, he
compa a i e pe spec i e in i es e lec ion on b oade s a egic hemes ele an o egions like
he Basque Coun y. One cen al lesson is ha egional compe i i eness is no d i en by a
singula model o impo ed bes p ac ices, bu a he by a egion’s capaci y o design and
main ain s a egies ha a e consis en wi h i s ins i u ional con ex and de elopmen
ajec o y.
Needless o say, Baden-Wü embe g illus a es he long- e m alue o s able indus ial
coope a ion ne wo ks, dual oca ional educa ion, and in e media y ins i u ions ha ansla e
esea ch in o applied inno a ion. These sys ems a e no he esul o sho - e m policy bu o
decades o collabo a i e e o and ins i u ional e olu ion.
The Basque Coun y has ollowed i s own dis inc pa h, g ounded in p oac i e indus ial
policy, s ong public leade ship, and delibe a e ins i u ional building. One o i s key s eng hs
lies in he exis ence o o ganisa ions ha gene a e c i ical knowledge and enable
e idence-based policymaking. A no able example is O kes a (The Basque Ins i u e o
Compe i i eness), which plays a i al ole in moni o ing compe i i eness ends, assessing
policy s a egies, and acili a ing dialogue among policymake s, academics, and p i a e
ac o s. O kes a's wo k, embedded in he academic and policy landscape, con ibu es o a
cul u e o e lec ion and accoun abili y ha s eng hens he egion’s s a egic go e nance.
This ins i u ional capaci y o c i ical assessmen , a e in many egional con ex s, sugges s
ha he Basque Coun y is no only implemen ing s a egies bu ac i ely lea ning om hem.
Ra he han iewing Baden-Wü embe g as a empla e o emula e, he compa ison se es o
36
highligh al e na i e mechanisms o building us , enhancing science-indus y connec ions,
o expanding oca ional and echnical pa hways, which may inspi e u he adap a ion in he
Basque model. Ul ima ely, bo h cases illus a e ha egional compe i i eness is less abou
policy ins umen s pe se and mo e abou long- e m commi men , s akeholde coo dina ion,
and he abili y o align economic de elopmen wi h ins i u ional capabili ies.
6.3. Limi a ions o he S udy and Fu u e Resea ch Di ec ions
Despi e he dep h o his compa a i e analysis, se e al limi a ions should be acknowledged.
Fi s , he use o he RCI 2.0 as a cen al benchma king ool in oduces a deg ee o abs ac ion.
While i o e s a ich, mul idimensional iew o compe i i eness, i simpli ies complex
eali ies in o composi e indica o s, po en ially masking unde lying socio-poli ical dynamics.
Addi ionally, in he case o Baden-Wü embe g, which is assessed a he NUTS 1 le el, he
RCI sco e agg ega es da a om ou NUTS 2 sub- egions. This a e aging may o e look
in a- egional a ia ions, hough in his case he sub- egions end o ollow a simila pa e n.
Second, while he quali a i e analysis aimed o con ex ualise hese da a, he scope o he
s udy necessa ily imposed limi s. Ce ain opics— o example sec o al specialisa ion, policy
implemen a ion p ac ices, o egional inno a ion go e nance—dese e deepe in es iga ion.
Mo eo e , his s udy did no aim o measu e he di ec impac o speci ic policies, no o
make causal claims abou ou comes.
Finally, he compa ison was es ic ed o wo egions, bo h o which a e ela i ely success ul
and ins i u ionally capable. Expanding he analysis o include o he Eu opean egions—such
as Uppe Aus ia, No h Rhine-Wes phalia, o Lomba dy—could o e u he insigh s,
pa icula ly in iden i ying di e gen models o hyb id s a egies.
Fu u e esea ch could build on his ounda ion by in eg a ing compa a i e benchma king wi h
ieldwo k, such as in e iews wi h key s akeholde s o de ailed policy analysis. Longi udinal
s udies ha ack he e ol ing impac o sma specialisa ion s a egies, g een ansi ions, o
digi alisa ion policies could p o ide aluable inpu o bo h academic and policy
communi ies.
Ra he han o e ing de ini i e answe s, his s udy p oposes a amewo k o lea ning and
e lec ion. In a global landscape ma ked by ola ili y and ans o ma ion, he abili y o
egions o main ain ins i u ional esilience, adap s a egies, and lea n c i ically om o he s
may p o e o be he mos endu ing sou ce o compe i i e ad an age.
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