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Development index: analysis of the basic instrument of Croatian regional policy

Author

Listed:
  • Ana Perisic

    (Polytechnic of Sibenik, Sibenik, Croatia)

  • Vanja Wagner

    (University of Zagreb, Faculty of Science, Department of Mathematics, Zagreb, Croatia)

Abstract

The development level assessment and categorization of Croatian local and regional units is based on the value of the development index which is the main instrument of Croatian regional policy. The development index is a composite indicator calculated as a weighted average of five socio-economic indicators. The goal of this paper is to analyze the uncertainty and sensitivity of the development index that arise from the procedures and indicators used in its construction. This analysis is then used to propose useful guidelines for future impovements. The methodology of the Croatian regional development index has been critically reviewed, revealing problems of multicollinearity and the existence of outliers. An empirical and relatively more objective multivariate approach for weight selection has been proposed. The uncertainty and sensitivity analysis were conducted using Monte Carlo simulations and variance-based techniques. Instead of a unique point estimate for the development level of territorial units an alternative confidence interval approach was considered.

Suggested Citation

  • Ana Perisic & Vanja Wagner, 2015. "Development index: analysis of the basic instrument of Croatian regional policy," Financial Theory and Practice, Institute of Public Finance, vol. 39(2), pages 205-236.
    • Handle: RePEc:ipf:finteo:v:39:y:2015:i:2:p:205-236
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    Cited by:

    1. Valér Veres & József Benedek & Ibolya Török, 2022. "Changes in the Regional Development of Romania (2000–2019), Measured with a Multidimensional PEESH Index," Sustainability, MDPI, vol. 14(21), pages 1-29, November.

    More about this item

    Keywords

    development index; composite indicators; multivariate analysis; uncertainty analysis; sensitivity analysis; Croatia;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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