Knowledge Platform

Measurement of the overall economic performance and its explanation through landscape variables

Measurement of economic performance through regional competitiveness is subject to a rather long-standing, still on-going discussion. For a deep insight and a comprehensive assessment of regional competitiveness, social and sustainability factors must also be taken into account, including landscape among them. Many of the approaches of measuring competitiveness, aim at considering and implementing this understanding.

Data Envelopment Analysis (DEA) provides an increasingly used method for measuring the close concept of efficiency. Based on the work of Charnes et al. (1978), the DEA has for example been used for comparative competitiveness assessment, (e.g. Huggins and Davies, 2006). The DEA is a non-parametric tool in which the production performance is rated by calculating the output to - input ratio of the respective production processes; the less input is required for producing a given output or the more output is produced with a given input, the higher is the efficiency score.

By using the DEA approach, it is possible to consider multiple inputs and outputs which can have different measuring units. Consequently, even factors which cannot (or only at great expense) be expressed in monetary units can be included in the assessment. This technique thus allows the integration of multiple economic, environmental and social aspects.

General Purpose and Application

DEA and competitiveness indicators can be used to measure the overall economic performance of a decision making unit (farm, region), taking into account multiple input and output. This may be extended to landscape related services. In addition, explaining this performance using landscape-related information may help understanding the role of landscape elements in contributing to competitiveness. The Data Envelopment Analysis (DEA) has been applied in the Austrian case study of "Mittleres Ennstal".

Lessons learned

These methods respond to the need for overall economic measures, also related to landscape features that are much needed. No surprise the growing attention to these methods. A critical issue is data availability that often limits the range of factors for which it is possible to include systematic measures in the model. For this reasons, attempts to integrate the DEA method with participative approaches have been recently proposed.

References & Further Reading

Charnes, A., Cooper, W., Rhodes, E. (1978): Measuring the efficiency of decision making units. European Journal of Operational Research 2 (6): 429-444.

Huggins, R., Davies, W. (2006). European Competitiveness Index 2006-2007, Robert Huggins Associates, Pontypridd.