Existing competitiveness indicator systems were used as guidelines in forming the framework behind
the Index. Three convergent pillars were found among the most common key indicator areas: Economic
Dynamism, Government Efficiency and Infrastructure. The framework integrates these pillars of local
economic development and competitiveness up to the regional, national, and global levels.
Economic dynamism is usually associated with activities that create stable expansion of business and
industries and higher employment. This is the concrete representation of productivity as it matches the output of the local economy with local
resources. Conceptually, it is the combination of the entrepreneurial spirit and the financial institutions that will channel dynamism
(Edmund Phelps). It is recognized that localities are the centers of economic activities. Therefore, business expansion and job creation are
easily observable in local settings.
Government efficiency refers to the quality and reliability of government services and government support for effective and sustainable productive expansion. Conceptually, this factor looks at government as an institution that is generally not corrupt; able to protect and enforce contracts; apply moderate and reasonable taxation and is able to regulate proactively (La Porta et al, 1999). This represents the people and culture factor that Porter alluded to in understanding the process of competitiveness and making locations productive. It is divided into ten indicators:
* Introduced new indicators to replace 2 indicators on Local Governance Performance Management
System (LGPMS). The indicators are: Transparency score and Economic Governance score.
Infrastructure refers to the physical building blocks that connect, expand, and sustain a
locality and its surroundings to enable the provision of goods and services. It involves basic inputs of production such as energy,
water; interconnection of production such as transportation, roads, and communications; sustenance of production such as waste, disaster
preparedness, environmental sustainability and human capital formation infrastructure. This represents the idea of making productivity
sustainable over time. It is divided into ten indicators: