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An evaluation of economic efficiency of finnish regions by DEA and Tobit models

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  • Loikkanen, Heikki A.

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  • Susiluoto, Ilkka

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Abstract

Private sector economic efficiency of 83 Finnish regions (labour market areas) in 1988-1999 is investigated by a two stage procedure. In the first stage non-parametric Data Envelopment Analysis (DEA) is used for calculating a best practise production frontier and relative efficiency scores for the regions. Outputs are regional value added and personal direct real income from employment. Inputs of the study include capital stock, employment by education level, years of schooling and volume of local public sector activity. In the second stage, regional differences in efficiency are studied by explaining inefficiency scores (1-efficiency scores) by econometric Tobit models. Here the independent variables include factors which were not explicitly included in the DEA-models such as size (population), location (economic distance) and production structure of regions.

Suggested Citation

  • Loikkanen, Heikki A. & Susiluoto, Ilkka, 2002. "An evaluation of economic efficiency of finnish regions by DEA and Tobit models," ERSA conference papers ersa02p237, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa02p237
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa02/cd-rom/papers/237.pdf
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    References listed on IDEAS

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    1. Joaquin Millan & Natalia Aldaz, 1998. "Agricultural productivity of the Spanish regions: a non-parametric Malmquist analysis," Applied Economics, Taylor & Francis Journals, vol. 30(7), pages 875-884.
    2. Joaquin Maudos & Jose Pastor & Lorenzo Serrano, 2000. "Efficiency and Productive Specialization: An Application to the Spanish Regions," Regional Studies, Taylor & Francis Journals, vol. 34(9), pages 829-842.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. Charnes, Abraham & Cooper, William W. & Li, Shanling, 1989. "Using data envelopment analysis to evaluate efficiency in the economic performance of Chinese cities," Socio-Economic Planning Sciences, Elsevier, vol. 23(6), pages 325-344.
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    Cited by:

    1. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    2. Lamia Mokaddem, 2014. "Evaluation of Tunisian Regions’ Efficiency Using DEA and TOBIT Models," Working Papers 862, Economic Research Forum, revised Nov 2014.
    3. Heikki Loikkanen & Ilkka Susiluoton, "undated". "Cost Efficiency of Finnish Municipalities in Basic Service Provision 1994-2002," Regional and Urban Modeling 283600056, EcoMod.
    4. Piekkola, Hannu, 2005. "Knowledge Capital as the Source of Growth," Discussion Papers 972, The Research Institute of the Finnish Economy.

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