THE ROLE OF ENVIRONMENT IN A REGION S SUSTAINABLE DEVELOPMENT AS DESCRIBED BY A BUTTERFLY CATASTROPHE MODEL

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1 THE ROLE OF ENVIRONMENT IN A REGION S SUSTAINABLE DEVELOPMENT AS DESCBED BY A BUTTERFLY CATASTROPHE MODEL Vasls Angels Quanttatve Metods Laboratory Department of Busness Admnstraton Unversty of te Aegean 8, Mcalon str. 800 Cos, Greece v.angels@aegean.gr Atanasos Angels-Dmaks Envronmental and Energy Management Researc Unt Scool of Cemcal Engneerng Natonal Tecncal Unversty of Atens 9 Herroon Polytecnou st. Zografou Campus, 5780 Atens, Greece angels@cemeng.ntua.gr Katerna Dmak Department of Statstcs Atens Unversty of Economcs and Busness 76, Patsson str. 044 Atens, Greece dmak@aueb.gr Abstract Te terrtoral organsaton of economes and socetes s undergong a dramatc cange. Globalsaton, tecnologcal nnovaton, mgraton and populaton ageng make t ncreasngly dffcult to predct te future of regons. Economc cange tests te ablty of all regons to compete and te gap between leadng and laggng regons n terms of growt, ncome and employment s wdenng. Envronmental factors test te ablty of natonal and local governments to manage resources n a sustanable manner and to mantan and mprove te qualty and safety of lfe, n areas sowng bot economc growt (congeston, polluton, contamnaton, waste generaton) or declne (abandoned land, degradaton of te bult ertage, lack of nvestment, etc.). Tese problems ave led, step by step, to a modfcaton of te targets of development and te acceptance tat te concept of development as to embody te qualty of economc growt, as well as ts quantty and uman well beng alongsde wt t. Sustanable development refers to te ablty of our socetes to meet te needs of te present wtout sacrfcng te ablty of future generatons to meet ter own needs. Measurng sustanable development means gong beyond a purely economc descrpton of uman actvtes; requres ntegraton of economc, socal and envronmental concerns. New tecnques are requred n order to bencmark performance, glgt leaders and laggards on varous aspects of regonal development and facltate efforts to dentfy best practces. New tools ave to be desgned so as to make sustanablty decson-makng more objectve, systematc and rgorous. Our am s to outlne te cangng role of envronment n a regon s development, present a measure of a regon s overall attractveness and ncorporate envronmental factors nto t. Te present paper focuses on te envronmental factors and ts scope s to: Outlne te cangng role of envronment n te process of an area s development over tme Present a measure of an area s overall attractveness Incorporate and quantfy te effect of envronment n te settng up of ts measure Keywords: Regon s Image, Regon s Attractveness, Regonal Development, Sustanable Development, Economc Factors, Socal Factors, Envronmental Factors, Butterfly Catastrope Model. JEL Classfcaton: C0, C65, Q0, Q5, R58

2 . Introducton Te development of an area depends on ts ablty to attract busness actvty. Busness moblty, owever, s largely a voluntary process. Busness unts move nto or out of a gven area on te bass of ter percepton of te area s relatve attractveness. Ter moblty s a functon of a multtude of factors. In te early stages of a country s ndustralzaton te domnant factors are economc. However as te ndustralzaton process progresses, te role of te socal factors s gradually strengtened and n some cases becomes decsve. Envronmental factors are usually te last to be consdered wen people realze tat te rapd growt of te socoeconomc subsystem as begun to overload some of te capabltes of te ecosystem locally as well as globally. Te scope of te present paper s to: Introduce/gve a bref overvew of te concept of sustanable development Outlne te cangng role of envronment n te process of an area s development over tme Present a measure of an area s overall attractveness Incorporate and quantfy te effect of economc, socal and envronmental factors n te settng up of ts measure. Sustanable Development Te concept of development s used to express te acevements or te postve canges n te basc elements of uman soco-economc beavour. Tose wo seek for a scentfc defnton for development dsregard te fact tat development s not only a tecncal subject. It as an mportant deologcal content and reflects a strong set of values. Tereby te term development s dentfed n te 0 t century wt te terms economc growt and ndustralsaton. Economc polces ave typcally measured development wt te growt of per capta ncome or consumpton. Sustanable development s not a new concept. J.S. Mll (84), one of te great economsts of te 9 t century, sowed s concern by focusng on ssues suc as te ultmate pont to wc socety s tendng by ts ndustral progress and te condtons manknd wll ave to face wen ts progress sezes. Many years later, R. Solow (99), anoter leadng and Nobel prze wnner economst, focusng on te same subject stated tat sustanablty must be understood as an oblgaton to conduct ourselves so tat we leave to te future te opton or - -

3 te capacty to be as well off as we are. Furtermore, e urged te decson makers to take all te measures needed to ensure a dstrbutonal equty between te present and te future. Today, te terrtoral organsaton of economes and socetes s undergong dramatc cange. Sustanable development s a strategy by wc communtes seek economc development approaces tat also beneft te local envronment and qualty of lfe.. Te cangng role of te Economc, Socal and Envronmental Factors n Sustanable Development As t as been mentoned already, envronmental degradaton s one of te basc problems facng most countres around te world. Furtermore t as been found tat one of te man causes of ts problem s ter fast economc growt. Obvously ts fndng rases a very mportant pont as economc growt and ndeed fast economc growt as for many years been consdered as te centrepece of a country s progress. Hence te concept of development as to be reconsdered. A new envronmental aspect of development may be added to te economc and socal ones and te blendng of all tree dmensons n defnng sustanable development over tme sould be examned. In te 950 s and 960 s te focus of economc progress was on growt and ncrease n output based manly on te concept of economc effcency. Envronment was not yet taken nto account snce t ddn t seem to affect te economc results. By te early 970 s te development paradgm sfted towards equtable growt were socal objectves were recognzed as dstnct from and as mportant as economc effcency. Te end of ts decade also marks te appearance of envronment as a new factor affectng economc actvty but wt lmted mportance. Envronmental treats are conceved of as local n tme and space and ence easy to overcome. Protecton of te envronment s te emergng strong new concern n te next decade Te concept of sustanable development as terefore evolved to encompass tree major ponts of vew: economc, socal and envronmental. Furtermore, by te end of te decade, envronmental concern s for te frst tme ntegrated nto te busness decson makng process. In te 990 s and at te begnnng of te st century, te crucal role of te envronmental dmenson and ts ncreasng contrbuton to sustanable development as been furter establsed. - -

4 4. Measurng Sustanable Development Measurng sustanable development means gong beyond a purely economc descrpton of uman actvtes and ntegrates economc, socal and envronmental concerns. In oter words, sustanable development means ensurng economc effcency wle respectng socal equty and safeguardng ecologcal ntegrty. Many tools and metodologes ave been used over te past years to measure te progress towards sustanablty (Munda, 006; Karol & Brunner, 009; Ygtcanlar & Dur, 00). Te majorty of tose metodologes make use of a sngle ndcator n order to measure separately te evoluton of eac component.e. te economc, te socal, te envronmental. Te crtera, accordng to wc ndcators are selected for measurng sustanable development, are exaustng n lterature (Barros & Komoto, 006; Sng et al, 009). In ts paper we ntroduce te concept of a regon s Image, a measure of ts overall progress towards sustanable development wc encompasses all te tree dmensons economc, socal and envronmental and suggests ways of measurng all tree dmensons as well as te regon s mage. 5. Te Regon as a Soco-economc Unt and te Process of Busness and Resdental Locaton Te growt and declne of a regon depends on ts ablty to attract and retan busness and people. Te realzaton tat places compete for nvestment as expanded n recent years to encompass competton among places for te attenton of nvestors and workers (Maleck, 004). As people and busnesses become more moble, tey wll move towards attractve places and evacuate unattractve places. Te success of a regon depends on ts capablty to attract and keep frms wt stable, or ncreasng, market sares, wlst mantanng stable or ncreasng standards of lvng for tose wo partcpate n t (Storper, 997); n oter words, wen te regon s able to generate g profts for ts busnesses and g standard lvng condtons for ts resdents (Brstow, 00). On te bass of all te above, one can say tat a regon sould ensure lvablty, nvestblty and vstablty (Kotler et al., 999) and, n dong so, t performs a number of functons: economc, socal and envronmental. Tese functons, owever, are not always compatble; on te contrary, te dea of a potental conflct between tem often appears n urban lterature. Concludng, t could be sad tat a regon, as a socoeconomc system, as to aceve not only a satsfactory economc performance, but also a number of oter basc socal and envronmental objectves. If tese are not met, ten, over te longer term, a conflct would arse and te stuaton would almost certanly not be sustanable (Llewellyn, 996; Loverng, 00; Brstow, 005)

5 Havng dscussed te nature of a regon as a socoeconomc unt we wll now look at te locaton process of bot busness unts and employees. Moblty wtn a state s largely a voluntary process. Hence, te growt and declne of a regon depends on ts ablty to attract and retan busness actvtes and te rgt blend of people to run tem (Brstow, 005). It s terefore mportant to understand ow busness unts and employees/resdents make ter locaton decsons. Earler papers ave sown tat tere seem to be a set of attracton factors, common for bot nvestors and employees. Tose factors nclude economc stablty, economc vablty, nfrastructure, fnancal resources, ealt and educaton facltes of g qualty and good envronmental condtons. Furtermore, tey may be dvded nto tree basc sets. Te frst set contans factors related to te economc functon of te regon; te second set contans factors related to te socal functon of te regon and fnally te trd set contans factors related to te envronmental functon of te regon. 6. Te Concept of a Regon s Image As t as been mentoned so far, te growt or declne of a regon depends on ts power to "pull" and retan bot busness actvtes and te rgt blend of people to run tem; ts pullng power depends on wat we call te Image of te regon. It can be argued tat, at eac pont n tme, te regon "sends out" ts Image and, dependng on ts mpact on te people (bot employers and employees), te regon may be consdered attractve or non attractve. One may also argue tat snce people "recevng" te mage of te regon belong to varous dstnct groups (.e. employers, unsklled workers, sklled workers etc.) and are senstve to dfferent factors, te mpact of te regon s Image on te members of eac partcular group wll be dfferent (Kotler et al., 999). Wlst ts argument s plausble, te avalable evdence suggests tat all groups of potental movers react smlarly to a basc set of factors; more precsely, a set of mnmum standards, largely common to all groups, must be satsfed f te regon s to be consdered as a potental coce by any of tem. Every communty must provde some basc standards of servces to attract and retan people, busness and vstors. Admttedly, no unform standards exst. Hence, every regon, n order to be/reman attractve, sould determne te standards pertanng eac tme and try to meet tem (Kotler et al., 999). To reconcle tese two vews we refne te concept of a regon's Image by ntroducng te followng two concepts: te Basc Image and te Specfc Image

6 Te Basc Image of a gven regon measures te degree to wc te regon satsfes a set of basc crtera, common for all movers. A regon satsfyng tose crtera s consdered by all potental movers as wort a closer examnaton and as a potental fnal coce. Te Specfc Image of a gven regon, as perceved by a partcular group of potental movers, measures te degree to wc movers belongng to tat partcular group consder te regon as ter best fnal coce. Ts Specfc Image, owever, altoug a functon of specfc factors appealng manly to members of tat group, s prmarly a functon of te regon s Basc Image. Te remander of ts paper wll focus on te defnton and study of a regon s Basc Image. Ts s a rater abstract concept wc expresses te actual state of te regon; a pyscally realzable measure for te Basc mage s dffcult to fnd. Wat may be measured more easly s te net cange of a regon's populaton due to mgraton durng eac tme perod. Suc a cange, owever, s of very lttle mportance as a measure of te real state of te regon. Te percepton and reacton tmes to any cange n te state of a regon s Basc Image are dfferent for te varous groups of potental movers and are partcularly long for certan vulnerable mnortes, wo lack real coce n place to lve and work. Hence, te measurable canges of te regon's populaton due to mgraton may be generally consdered as te delayed and consderably smooted consequence of canges n te Basc Image. Te study of te mecansms governng te sapng and te canges of a regon's Basc Image s a task of mperatve mportance. Apart from smplfyng te analyss of a regon s beavour, te Basc Image, as an overall measure of ts attractveness and performance, as te followng two advantages:. It gves an early warnng of any potental danger of declne.. It gves te "true" pcture of te regon and elps decson makes to detect te causes and not only te symptoms of any exstng problems. An early and correct dagnoss of a problem s peraps te bggest step towards ts soluton. In te case of regonal development, owever, te seeds of decay are usually planted durng a perod of prosperty and no acton s taken aganst tem untl t s too late (Kondaks et al., 009; Angels, V. & Dmak, K. 0). Ironcally, te very state of beng an attractve place may unleas forces tat ultmately unravel te attractveness of a place. Many places experence a perod of growt, followed by a perod of declne, and te fluctuatons may be repeated several tmes. Terefore, a montorng devce, wc wll alert us at te frst sgt of danger, s a tool of great mportance (Kotler et al., 999)

7 We ave so far ntroduced te Basc Image of a regon as a functon of a number of factors wc nfluence te movement of people and ndustres. Moblty s essentally a voluntary process and state nterventon may only be passve n te sense tat t can stop or nfluence movement but t can not drect t. Hence, any attempt to mprove or sustan te attractveness of a regon must be drected towards provdng te framework wtn wc ts voluntary process can flours. Te Basc Image as defned may be te bass for suc a framework and te factors affectng wll be te prme targets for mprovement. Te factors affectng te Basc Image tat ave been presented so far nclude fnancal condtons, employment, socal condtons, ealt and educaton qualty, envronmental condtons, regonal nfluence etc. Furtermore tey may be dvded nto tree groups dependng on wc dmenson of te regon s development tey refer to. In some prevous papers (Angels & Dmopoulou 99; Angels, V. & Dmak, K. 0) te factors affectng a regon s Image were dvded nto two groups related to te economc and socal dmensons of ts development, provdng n tat way measures of ts economc potental and socal condtons. Tese measures were referred to as te Economc Indcator and te Socal Indcator. Evdence was also presented to support tat te Economc and Socal ndcators may be seen as conflctng ndcators. Te expresson of a regon's Basc Image as a functon of two conflctng Indcators and te use of te Cusp Catastrope to model t s, up to a certan pont n tme, n lne wt te overvew presented n te prevous secton. Indeed, accordng to ts overvew, economc growt was te only concern of development untl te early 970's wen socal objectves gradually began to appear as dstnct from and as mportant as economc effcency. However, by te early 980's protecton of te envronment appeared and soon became te trd objectve of development. (Svedn, 99; Munasnge, 99). In Angels et al. (999) te envronmental qualty was one of te factors tat ave been consdered as affectng te area's Socal Indcator. However, as envronmental qualty becomes ncreasngly mportant, tere s a growng need to solate t and to treat t separately as a trd ndcator let's say Envronmental Indcator (Bovolos et al., 0). In ts work, we present a novel way to model a regon s Image by takng nto account te effect of economc, socal and envronmental mpact. To ts end we classfy te varous factors affectng a regon s Image nto tree groups accordng to weter tey express te economc, te socal or te envronmental functon of te regon. Te Economc Indcator s a functon of factors lke GDP per Capta, Energy Expendture per Capta, Employment Rate, Researc & Development percentage of GDP and gves a measure of te ndustral potental of te area

8 Te Socal Indcator s a functon of factors lke Publc Expendture on Educaton Persons wt Upper Secondary or Tertary Educaton, Healty Lfe Years, Hosptal Beds, Expendture on Socal Protecton, People at Rsk of Poverty or Socal Excluson and gves a measure of te socal condtons n te area. Te Envronmental Indcator s a functon of factors lke Sare of Renewable Energy Sources (RES) n Electrcty Generaton, Sare of Renewable Energy Sources (RES) n gross Fnal Energy Consumpton (FEC), Energy Intensty of te Economy, Greenouse Gas Emssons and gves te measure of te qualty of te envronment n te regon. Hence, Basc Image Economc Indcator, Socal Indcator, Envronmental Indcator Te expresson of te Basc Image as a functon of te Economc, Socal and Envronmental Indcator s not accdental; on te contrary, t s consstent wt te concept of a regon as a soco-economc unt. Te man advantage of suc an expresson s tat t may be used to underlne and eventually descrbe, te basc conflct tat caracterses te development of a regon (Llewellyn, 996; Loverng, 00; Brstow, 005). Furtermore, te Envronmental Indcator may be seen as a buffer lmtng te decrease of attractveness of a declnng regon and facltatng te reversal of ts declnng trend. At ts pont t sould be mentoned tat te growt of a regon may be expressed bot n absolute or relatve terms. In te latter and most nterestng case te development pattern of a gven regon s compared to tat of a ypotetcal regon, wc s referred to as te typcal regon and expresses, as far as possble, an average of te man regons of a smlar type to tat of te study. In ts paper we sall be lookng at te relatve development patterns of a regon. Hence, all te factors affectng ts mages (Basc and Specfc) sould be expressed n relatve terms as compared to te correspondng values of te typcal regon. 7. Propertes of a Regon s Basc Image Let us now move a step furter and concentrate on te problem of te teoretcal sape of te grap of te Basc Image. In order to get a frst feelng of te sape of tose graps we start by statng te followng smple observatons descrbng te way n wc te two or tree ndcators operate.. Te ger te Industral Indcator of a regon te more Attractve ts Basc Image.. Te ger te Socal Indcator of a regon te more Attractve ts Basc Image.. Te ger te Envronmental Indcator of a regon te more Attractve ts Basc Image

9 v. If te Industral Indcator of a regon s contnuously ncreasng but at te same tme ts Socal Indcator s contnuously decreasng, te Basc Image of te regon may be eter Attractve or Repulsve and sudden canges n ts state may be expected. Suc observatons altoug trval and only a frst approxmaton of te trut, tey gve us some useful background nformaton and elp us deduce te sape of te tree-dmensonal grap. Observaton (v) s te most nterestng because t mples tat te grap we want to draw s dscontnuous. Tose observatons make te dea of a dscontnuous grap credble and wort pursung furter (Pke et al., 006; Capello, 007; Capello et al., 008). Te general matematcal teory of dscontnuous and dvergent beavour from contnuous underlyng forces s called Catastrope Teory (Tom, 975; Zeeman, 97). Te teory s derved from Topology and s based upon some new teorems n te geometry of many dmensons, wc classfy te ways n wc dscontnutes may occur, n terms of a few arcetypal forms called elementary catastropes (Poston and Stewart, 996). Altoug te underlyng matematcs are dffcult and te proofs of te teorems nvolved complcated, te elementary catastropes temselves are relatvely easy to understand and can be used effectvely, even by non-experts n te subject (Angels and Dmopoulou, 99). Catastrope teory was developed and popularzed n te early 970 s. After a perod of crtcsm, t s now well establsed and wdely appled (Rosser, 007). Today, te teory s very muc alve and numerous nonlnear penomena tat exbt dscontnuous jumps n beavor ave been modeled by usng te teory, for nstance n cemstry (e.g Wales, 00), n pyscs (e.g. Aerts, 00), n psycology (e.g. Van der Mass et al., 00) n clncal studes (e.g. Smerz and Guastello, 008) and n te socal scences (e.g. Smt et al., 005; Dou and Gose, 006; Huang, 008). Table summarzes te elementary catastropes n te case were a process s expressed troug one beavour varable dependng on one up to four control varables. In te case of a process, for example, wose beavour depends on two control varables t s suffcent to know tat a teorem exsts gvng te qualtatve sape of a -dmensonal surface, wc sows all possble ways n wc a dscontnuty n te beavour may occur. Te two control varables are usually referred to as normal and splttng factor respectvely. Table : Some Elementary Catastropes Number of Beavor Varables Number of Control Varables Type of Catastrope Fold Cusp Swallowtal 4 Butterfly - 9 -

10 Elementary Catastropes ave caracterstc nvarant propertes and, often, even wave flags (Glmore, 99) to gan our attenton. Modalty arses wen, for some combnatons of values of te control parameters, tere are two or more possble stable values for te state varable. Sudden Jumps take place wen a small cange n te values of te control parameters may result n a large cange n te value of te state varable, as te system jumps from one local mnmum to anoter. Hysteress occurs wenever a pyscal process s not strctly reversble. Tat s, wen te jump from one local mnmum to anoter does not occur over te same pont n te control parameter space as te recprocal jump. Dvergence arses wen small canges n ntal values of te control parameters lead to large canges n te fnal value of te state varable. Inaccessblty means tat te pyscal system as an equlbrum state wc s unstable. Returnng to te present case, our ntenton s to sow tat te process of sapng a regon s Basc Image may be modeled n terms of a butterfly catastrope. Te frst step towards ts drecton wll be to sow tat at least some of te fve nvarant propertes caracterzng penomena tat may be descrbed by te butterfly catastrope (.e. modalty, sudden transtons, ysteress, dvergence and naccessblty) are present n our partcular case. Earler works (e.g. Angels & Dmak, 0), ave sown tat te fve propertes caracterzng penomena exbtng non-lnear beavour are present n te process of sapng a regon s Basc Image. 8. Modelng a Regon s Basc Image We ave so far sown tat te process of sapng a regon s Basc Image as all te propertes caracterzng penomena wc may be modeled n terms of Catastrope Teory. Hence we may now use Catastrope Teory to estmate a regon s Basc Image. It s remnded tat te Basc Image of a regon as been defned as a functon of tree ndcators. Terefore, te approprate elementary catastrope s te butterfly wc s extremely useful n qualtatve modelng especally for stuatons were a compromse emerges between conflctng states. Consequently, te value x, of a regon s Basc Image, at eac pont n tme, s gven as a soluton of te equaton: - 0 -

11 5 x Cx Bx A 0 () Equaton () s referred to as te Basc Image Equaton and ts grap s qualtatvely equvalent to te Butterfly Catastrope Grap (Fgure ). Te relatonsp () s a quntc equaton, wc descrbes a 4-dmensonal manfold wt a fold of a complcated structure, wc s called pleat. Suc a pleat s determned as a -dmensonal surface wt a butterfly sape. Fgure : Te Butterfly Catastrope Grap It can be proved tat: mk k m a a0 0 A tan m B k m k 0 b b wen tan k C m k m c d0 (smlar relatonsps may be gven for all te combnatons of te values of m and k ) were: abc,, are te values of te regon s Economc, Socal, Envronmental Indcators respectvely. a0, b0, c 0 are te values of te typcal regon s Economc, Socal, Envronmental Indcators m k tan tan respectvely : Varable expressng te relatve wegt attaced between te Economc and Socal Indcators n defnng te area s Basc Image : Varable expressng te relatve wegt between te plane defned by te Socal and te Economc Indcators and te Envronmental Indcator. - -

12 For te purposes of ts work, te values of all Indcators le n te nterval [0,], wereas te value of ts Basc Image les n te nterval [-,]. Te value of te "typcal" regon's Basc Image s 0. Hence, postve Basc Image ndcates an attractve regon tat may be consdered as a potental fnal coce by te varous groups of prospectve movers. We ave so far defned a regon s Basc Image as a functon of a multtude of factors, grouped nto tree potentally conflctng ndcators. A large varety of ndcators, eter smple or composte, quantfyng te economc, socal and envronmental dmenson of a regon may be found n te relevant lterature (Hammond et al., 995; Freudenberg, 00; Slavova, 008; Eurostat Regonal Yearbook, 008). For te purposes of our model, tose ndcators are expressed as te geometrc mean of several Sub ndcators, eac of wc depends on a number of factors among tose affectng te regon s Basc Image. Te use of ts geometrc mean s justfed by te fact tat eac one of te Sub ndcators affectng te respectve ndcator s consdered to be crtcally mportant for ts ndcator s value. Consequently, m IND m,,, ;,,, n; j,,, m j j were, IND denotes te t Indcator of regon and j denotes te t j Sub ndcator of regon, wc s related to Indcator. Eac Sub ndcator j s defned as a nonlnear functon of a respectve Relatve Index j. Ts ndex s, n turn, a functon of all varables, measured or estmated, affectng te Sub ndcator and may be defned n te followng two ways: Te values of all varables, expressed n relatve terms wt respect to te typcal regon, are used to obtan drectly te Relatve Index j,,, m. j,,,,,,, n, Te varables are classfed nto varous sets, dependng on te specfc component of te Sub ndcator tey affect. Te values of all varables belongng to every set, expressed n relatve terms wt respect to te typcal regon, are used to obtan drectly te respectve Relatve Sub ndces RSI,,,,,,, n, j,,, m, k,,, r. Fnally, tose Sub Indces are combned so as to gve Relatve Index: jk - -

13 j r k k r w RSI k w k jk,,,,,,, n, j,,, m, were, w k, k,,,r are wegts ndcatng te relatve mportance attaced to eac Sub ndex n defnng te respectve Relatve Index. Once te Relatve Index as been defned, ts values are transformed so as to obtan te correspondng values of Sub ndcator j. Note tat eac Sub ndcator and te respectve Relatve Index summarze te same aspect of a regon s development. Te transformaton used works as a standardzaton process and t s needed to ensure tat: all Sub ndcators ave te same range. For te purposes of te model, all Sub ndcators ave te same range values usually [0,]; ence, te range of ter product s [0, n ] and, consequently, te range of IND,,, ;,,, n s also [0,]. In certan cases, owever, te domnance of a partcular Sub ndcator needs to be empaszed. Ts may be done by ncreasng ts range. In suc a case, te range of te remanng Sub ndcators must be modfed, so tat te range of ter product remans te same.e. [0, n ]. te effect of canges n te values of varables on te values of te respectve Sub ndcators follow te same pattern for all Sub ndcators. Table : Te Economc, Socal and Envronmental Indcators of regon IND : : : : j j IND,,,, n Te Economc Indcator of regon Te Fnancal Condtons Sub ndcator of regon Te Employment Sub ndcator of regon Te R & D Sub ndcator of regon IND : : j j IND,,,, n Te Socal Indcator of regon Te Educaton Sub ndcator of regon : Te Healt Sub ndcator of regon : Te Socal Condtons Sub ndcator of regon IND : : j j IND,,,, n Te Envronmental Indcator of regon Te RES Sub ndcator of regon : Te Energy Effcency Sub ndcator of regon : Te Clmate Cange Sub ndcator of regon - -

14 Returnng to te present case, t s remnded tat te factors affectng a regon s Basc Image may be allocated nto tree sets, accordng to weter tey express te economc, te socal or te envronmental aspect of te regon. Te factors of te frst set provde a measure of te regon s economc development prospects. Ts measure s referred to as te Economc Indcator. Smlarly, te factors of te second set provde a measure of te regon s socal profle. Ts measure s referred to as te Socal Indcator. Fnally, te factors of te trd set provde a measure of te regon s envronmental profle. Ts measure s referred to as te Envronmental Indcator. Furtermore, eac of tose Indcators s expressed as te geometrc mean of several Sub ndcators as sown n Table. A clear overvew of te varables affectng a regon s Basc Image and ter converson troug Sub Indces, Relatve Sub ndces, Relatve Indces and Sub-ndcators nto Indcators and, fnally, nto te regon s Basc Image s gven n Table. One may argue tat some sgnfcant varables expressng te regon s power to retan/attract movers belongng to varous groups are mssng from Table. Suc varables nclude labour avalablty/qualty and fnancal ncentves for nvestors, as well as job avalablty/qualty, employment earnngs and fnancal ncentves for employees. Ts s a plausble argument but, on te oter and, t must be noted tat tose varables wll be used n a next step, wc, owever, s beyond te scope of ts paper, for te estmaton of a regon s Specfc Images, as perceved by te varous groups of potental movers. Te Specfc Images express te degree to wc te members of eac group consder te regon as ter best fnal coce. A pyscally realzable measure of tose Images s te net cange, over a perod of tme, n te number of te members of eac group present n te regon. As t as already been mentoned, tose canges may be generally consdered as te delayed and consderably smooted consequences of te canges n te Basc Image. Hence, a regon s Basc Image, as defned, gves a relable overall estmate of te regon s prospects of development and an early warnng for any potental danger. Fnally, t must be underlned tat te coce of varables used for te estmaton of a regon s Basc Image depends, among oter tngs, on te avalablty of data. In any way, owever, our ntenton n ts paper s to provde a generc framework for te estmaton of a regon s Basc Image. Wtn ts framework, every researcer may make te approprate modfcatons accordng to bot s researc requrements and te data avalablty

15 Table : Converson of te varables affectng te Basc Image of regon INDICATORS, INDICES AND VAABLES CONCERNING REGION Indcators Sub ndcators Relatve Indces Relatve Sub ndces Sub ndces Varables Economc Indcator IND Socal Indcator IND Te Fnancal Condtons Sub ndcator Te Employment Sub ndcator Te R & D Sub ndcator Te Educaton Sub ndcator Te Healt Sub ndcator Te Socal Condtons Sub ndcator Relatve Fnancal Condtons Index Relatve Employment Index Relatve R & D Index Relatve Educaton Index Relatve Healt Index Relatve Socal Condtons Index Relatve Sub ndex for Gross Domestc Product per nabtant RSI Relatve Sub ndex for Energy expendture per nabtant RSI Relatve Sub ndex for Persons wt upper secondary or tertary educaton RSI Relatve Sub ndex for Publc expendture on educaton RSI Relatve Sub ndex for Healty Lfe years RSI Relatve Hosptal beds Sub ndex RSI Relatve Sub ndex for Socal Protecton Expendture RSI Relatve Sub ndex for People at rsk of poverty RSI Sub ndex for Gross Domestc Product per nabtant SI Sub ndex for Energy expendture per nabtant SI Sub ndex for Persons wt upper secondary or tertary educaton SI Publc expendture on educaton SI Sub ndex for Healty Lfe years SI Sub ndex for Hosptal beds SI Sub ndex for Socal Protecton Expendture SI Sub ndex for People at rsk of poverty SI Gross Domestc Product Populaton Energy expendture Populaton Persons aged 0 to 64 n employment Populaton of te same age group Gross domestc expendture on R&D Gross Domestc Product Persons wt upper secondary or tertary educaton, 5 to 64 years Populaton of te same age group Publc expendture on educaton Gross Domestc Product Healty Lfe years for males Healty Lfe years for females Males/females n te populaton Hosptal beds (per 00,000 nabtants) Socal Protecton Expendture Populaton People at rsk of poverty Populaton Envronmental Indcator IND Te Renewable Energy Sources (RES) Sub ndcator Te Energy Effcency Sub ndcator Relatve Renewable Energy Sources (RES) Index Relatve Energy Effcency Index Relatve Sub ndex for Sare of RES n Electrcty Generaton RSI Relatve Sub ndex for Sare of RES n FEC RSI Sub ndex for Sare of RES n Electrcty Generaton SI Sub ndex for Sare of RES n gross FEC SI Sare of RES n Electrcty Generaton Total RES Consumpton Total Fnal Energy Consumpton (FEC) Gross Energy Consumpton Gross Domestc Product Te Clmate Cange Sub ndcator Relatve Clmate Cange Index Total Greenouse Gas Emssons Populaton Te frst of te Sub ndcators presented n Table s defned below. Te remanng Sub ndcators are defned n a smlar way

16 Te Fnancal Condtons Sub Indcator: Te term refers to te level of geveral economc condtons prevalng n te regon and someow reflects te standard of lvng of ts nabtants. Te Fnancal Condtons Sub ndcator of regon, s a non-lnear transformaton of te Relatve Fnancal Condtons Index, wc combnes two aspects of te regon s economc condtons: te level of Gross Domestc Product (GDP) and energy expendture. Te level of GDP s expressed troug te Relatve Gross Domestc Product per nabtant Sub ndex, RSI, wc s te rato of te total GDP to te populaton, expressed n relatve terms. Te energy expendture s expressed troug te Relatve Energy Expendture per nabtant Sub ndex, RSI wc s te rato of energy consumpton to te populaton, expressed n relatve terms. Hence, on te bass of te above, we ave tat RSI w RSI w w RSI w, were w, w are te approprate wegts 9. Applcaton of te Proposed Model Te metodology presented n te prevous secton as been used for te estmaton of te Basc Image of four countres n te Sout of Europe, Greece, Italy, Span and Portugal, over te perod Te Basc Image values of te typcal country (regon), wc s taken as te average of tose four countres, ave also been calculated. Te requred data ave been drawn from te offcal ste of Eurostat. Te results are summarzed n Fgures -5. Fgure presents te values of te Economc Indcator for all four countres and te typcal country trougout te perod under study. As we san see Greece as te lowest Economc Indcator value among te four countres, wc as been actually steadly decreasng over te perod under study. Portugal started wt an Economc Indcator value lower tan tose of Italy and Span, but by te end of te perod, t as surpassed tem. Fnally, Italy and Span sow an almost constant Economc Indcator trougout te perod under study wt te lead cangng between tem untl 008, wen Portugal clmbed nto te frst place. It must be noted tat trougout te perod Greece mantans an Economc Indcator value lower tan tat of te typcal country, wereas Italy, Span and Portugal exbt values ger tan tat of te typcal country, wt only a few exceptons. Fgure presents te values of te Socal Indcator for all four countres and for te typcal country trougout te perod under study. As we can see Italy started wt te - 6 -

17 gest Socal Indcator value followed by Greece wc owever s catcng up Italy towards te end of te perod. Span sows an almost constant Socal Indcator value trougout te perod and te same olds for Portugal but at a lower level. It must be noted tat trougout te perod Portugal and Italy mantan Socal Indcator values lower tan tat of te typcal country, wereas Greece and Span ger values. Fgure : Te Economc Indcator of te European Sout, ,56 0,54 0,5 0,50 0,48 0,46 0,44 0,4 0, GREECE SPAIN ITALY PORTUGAL TYPICAL Fgure : Te Socal Indcator of te European Sout, ,56 0,54 0,5 0,50 0,48 0,46 0,44 0,4 0, GREECE SPAIN ITALY PORTUGAL TYPICAL Fgure 4 presents te values of te Envronmental Indcator for all four countres and for te typcal country trougout te perod under study. Portugal mantans te gest Envronmental Indcator value over te wole perod, wereas Greece te lowest. Span and Italy exbt an almost constant Envronmental Indcator value at a smlar level trougout te perod. It must be noted tat trougout te perod under study Greece and Span (wt a few exceptons) mantan Envronmental Indcator values lower tan tat of te typcal country, wereas Portugal and Italy (wt a few exceptons) ger. Fgure 4: Te Envronmental Indcator of te European Sout, ,60 0,58 0,56 0,54 0,5 0,50 0,48 0,46 0,44 0,4 0, GREECE SPAIN ITALY PORTUGAL TYPICAL - 7 -

18 Fgure 5: Te Basc Image of te European Sout, ,80 0,60 0,40 0,0 0,00-0,0-0,40-0,60-0, GREECE SPAIN ITALY PORTUGAL Fnally, Fgure 5 presents te values of Basc Image for all four countres and for te typcal country trougout te perod under study. Italy and Span mantan an almost constant postve Image value wt Italy leadng n te former years and Span n te latter. Greece and Portugal mantan a negatve Basc Image value wt Portugal avng constantly te worse value. 0. Conclusons and Suggestons for furter Researc A regon s development depends on ts ablty to retan exstng busness actvtes and attract new ones. Ts ablty depends on wat we call te Image of a regon and t s a measure expressng te regon s current state of development and ts future prospects. Te paper ntroduced te concept of a regon s Basc Image, developed a matematcal model for ts estmaton, appled te model to te case of four countres of te European Sout namely, Greece, Span, Italy and Portugal and presented te results. Te Basc Image gves a true pcture of a regon s development and an early warnng of any future problems. Furtermore, ts structure allows a researcer to dentfy not only te canges n te Basc Image values, but also te causes of tose canges and, ence, take te necessary measures. Consequently, te Basc Image may prove to be a very useful manageral tool, wc can elp te autortes to mprove te regon s attractveness and future prospects of development. Te applcaton results seem logcal and expected. Tey sow tat te proposed model expresses a regon s attractveness n a realstc way, n te sense tat t quantfes te regon s appeal to te full range of ts exstng and potental busness unts and employees. Te Basc Image, as defned so far, as left out a number of mportant varables, endogenous or exogenous. Hence, anoter area of furter researc would be to redefne a regon s Basc Image, so as to nclude some of tose varables. Suc a set of varables may be tose related to te prevalng soco-economc envronment n wc te regon operates and could defne a fourt ndcator, wc may be referred to as General Economc Clmate Indcator. As t as been seen n secton 7, n te case of tree or four ndcators te most approprate elementary catastropes are te - 8 -

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