Existing competitiveness indicator systems were used as guidelines in forming the framework behind the Index. Four convergent pillars were found among the most common key indicator areas: Economic Dynamism, Government Efficiency, Infrastructure, and Resiliency. 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.

  1. Size of the Local Economy (as measured through business registrations, capital, revenue, and permits)
  2. Growth of the Local Economy (as measured through business registrations, capital, revenue, and permits)
  3. Capacity to Generate Employment
  4. Cost of Living
  5. Cost of Doing Business
  6. Financial Deepening
  7. Productivity
  8. Presence of Business and Professional Organizations

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:

  1. Capacity of Health Services
  2. Capacity of Schools
  3. Security
  4. Business Registration Efficiency
  5. Compliance to BPLS standards
  6. Presence of Investment Promotions Unit
  7. Compliance to National Directives for LGUs
  8. Ratio of LGU collected tax to LGU revenues
  9. Most Competitive LGU awardee
  10. Social Protection

* 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:

  1. Existing Road Network
  2. Distance from City/Municipality Center to Major Ports
  3. DOT-Accredited Accommodations
  4. Availability of Basic Utilities
  5. Annual Investments in Infrastructure
  6. Connection of ICT
  7. Number of Public Transportation Vehicles
  8. Health Infrastructure
  9. Education Infrastructure
  10. Number of ATMs

RESILIENCY is the capacity of a locality to facilitate businesses and industries to create jobs, raise productivity, and increase the incomes of citizens over time despite of the shocks and stresses it encounters. This implies that the role of local governments is critical in ensuring a competitive environment to make businesses sustain their profits, create jobs, and increase the productivity of its people. In order for localities to be able to do this, it must be resilient in its infrastructure, governance, social and environmental systems.

  1. Organization and Coordination: Land Use Plan
  2. Organization and Coordination: Disaster Risk Reduction Plan
  3. Organization and Coordination: Annual Disaster Drill
  4. Organization and Coordination: Early Warning System
  5. Resiliency Financing: Budget for DRRMP
  6. Resiliency Reports: Local Risk Assessments
  7. Resiliency Infrastructure: Emergency Infrastructure
  8. Resiliency Infrastructure: Utilities
  9. Resilience of System: Employed Population
  10. Resilience of System: Sanitary System​