Efficiency of Economic Regions in Finland 1988-1999: Application of the DEA method

The economic efficiency of the private sector in the 83 Finnish labour market areas is investigated by using the Data Envelopment Analysis method. This method is often used for assessing efficiency in public service production, but it can also be applied to regional economies. Compared with ordinary production function analysis, one of its advantages is the possibility to handle several output variables at the same time. For the study, private sector capital stock was first estimated. Other inputs included the number of employed by education level, years of schooling of the population and the local volume of public sector activity. As outputs, regional value added and personal real income were used. The study period 1988-1999 is interesting, because it includes years of rapid growth (1988-1990), falling into a deep recession (1990-94) as well as a time of recovery (1994-1999).

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

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.

Cost Efficiency of Finnish Municipalities 1994-2002. An Application of DEA and Tobit methods

Cost efficiency of basic welfare service provision in 353 Finnish municipalities in 1994-2002 is investigated in an ongoing study. The municipal sector has a central role in the Finnish economy as a provider of welfare services. Data Envelopment Analysis (DEA), a non-parametric linear programming method is employed, calculating a best practise production frontier for the decision making units, and comparing the various DMUs with this frontier. The inputs consisted of four to ten of the most important services in health, social and educational sector. As the combined output, total real production costs of these services were used. According to the results efficiency differences were considerable between the municipalities, and a small group of a peripheral municipalities scored clearly below the others. Annual changes in cost efficiency were estimated. At the second stage, differences in the DEA efficiency scores were explained by using Tobit panel models. It was found that larger population and peripheral geographic position tend to reduce efficiency of municipal service production, while higher education level of inhabitants increases it.

Performance of municipalities, politics and leadership

Peer reviewe

Russia of Challenges

In 2007 the Ministry of Defence conducted the research project Stable Russia – an evaluation of the security situation in Finland’s neighbourhood. The goal of the project was to paint an all-round picture of the factors affecting stability in Russia as well as possible destabilizing developments which could alter the security situation close to the Finnish borders. The project comprehensively tapped into Finnish Russia-expertise. This publication is based on the reports written for that project

AN EVALUATION OF ECONOMIC EFFICIENCY OF FINNISH REGIONS BY DEA AND TOBIT MODELS* **

Abstract: In the first phase of the study, private sector economic efficiency scores for 83 Finnish regions in 1988Finnish regions in -1999 were estimated by the Data Envelopment Analysis (DEA) method. Inputs in the DEA analysis included capital stock, employment by education level, years of schooling and volume of local public sector activity. Outputs were regional value added and personal direct real income from employment. Efficiency differences between regions proved to be considerable and they were correlated with several regional factors. In the second phase the differences in the efficiency scores were explained by using Tobit and logistic regression models. In these cross-section models (1988, 1993, 1999 and average of 1988-1999) the explanatory variables included regional characteristics such as population size, distance from national centres, structure of regional economy (concentration), the existence of university, number of students, accessibility index, innovativity index and the number of patents

Haasteiden Venäjä

Puolustusministeriössä toteutettiin vuonna 2007 ”Arvio Suomen lähialueturvallisuudesta – Vakaa Venäjä”- hanke. Hankkeen tavoitteena oli antaa monipuolinen kuva Venäjän vakauteen vaikuttavista tekijöistä ja mahdollisista kehityssuunnista, jotka voivat aiheuttaa epävakautta ja siten muuttaa Suomen lähialueturvallisuuden tilaa. Hanke toteutettiin hyödyntäen laajasti kotimaista Venäjä-asiantuntemusta. Tämä julkaisu on toimitettu hankkeessa laadittujen raporttien pohjalta