Shedding light on global competitiveness by analyzing regional competitiveness within the European Monetary Union

A review of the current literature reveals a lack of studies that directly address the relationship between regional competitiveness and monetary union. We make a contribution to the debate on the measurement of competitiveness in a monetary union by incorporating the territorial dimension. We develop a novel measure of regional real exchange rates as a proxy of regional competitiveness, analysing 127 Eurozone regions over the period 2003–2021. The findings of our study offer two key insights. First, we observe a geographical distribution of the real exchange rate, indicating that regional competitiveness is not only unevenly distributed across regions but also evolves over time. Secondly, we identify neighbouring effects from spatial dependence, which demonstrates that the competitiveness of a given region is influenced by that of neighbouring regions.