A non-radial DEA index for Peruvian Regional Competitiveness

A non-radial DEA index for Peruvian Regional Competitiveness

Díaz, J., & Vincent, C. (2016). A non-radial DEA index for Peruvian regional competitiveness. Social Indicators Research. Retrieved from: https://link.springer.com/article/10.1007/s11205-016-1444-9. [Published: 2016].

 

 

 

 

Autor(es): Vincent Charles and Guillermo Díaz.

 

ABSTRACT: In this paper, we propose a method to measure competitiveness performance at the subnational level, with an application to Peruvian regions. For this, we propose abenefit-of-the-doubt composite index that summarizes the information of several indicatorsthat characterize competitiveness. It is based on an optimization approach, using dataenveloping analysis (DEA) techniques, so that each indicator is weighted in an endogenousway, and each unit is evaluated in the most favourable light.

Our proposed index is a nonradialvariant of the typical DEA scores, which avoids the traditional pitfalls of DEA-basedcomposite indices, such as unreasonable weights. Additionally, we propose a meta-frontier approach in order to compare the competitiveness performances across different periods ofevaluation. Our assessments of the Peruvian regions’ competitiveness performanceimprove on the results of traditional DEA methods, which award high marks to regionswith very heterogeneous performance (i.e., regions with very high scores in some indicators,and very poor in others). Additionally, the comparison of the performance acrosstime shows a general decrease in the average competitiveness between 2008 and 2014 of the Peruvian regions.