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<p>The significance and methods of measuring inefficiency of local communities has been gaining prominence in the last decade. The purpose of this paper is to empirically investigate the level of technical inefficiency in the sample of local communities in Bosnia and Herzegovina (BiH) for the year of 2017. We implement parametric stochastic frontier analysis (SFA) to conduct an input-oriented stochastic parametric approach to measuring technical inefficiency of local communities in BiH. The results of our work are complementary to previous research indicating relative technical inefficiency of local communities in BiH. On average, BiH local communities’ total expenditures can be reduced by 46.8 percent without reducing output levels to achieve the result of the local community on the best practice frontier. Since our analysis and selection of variables are driven by data availability, the future research plans to include more variables.</p>
</abstract>

The significance and methods of measuring inefficiency of local communities has been gaining prominence in the last decade. The purpose of this paper is to empirically investigate the level of technical inefficiency in the sample of local communities in Bosnia and Herzegovina (BiH) for the year of 2017. We implement parametric stochastic frontier analysis (SFA) to conduct an input-oriented stochastic parametric approach to measuring technical inefficiency of local communities in BiH. The results of our work are complementary to previous research indicating relative technical inefficiency of local communities in BiH. On average, BiH local communities’ total expenditures can be reduced by 46.8 percent without reducing output levels to achieve the result of the local community on the best practice frontier. Since our analysis and selection of variables are driven by data availability, the future research plans to include more variables.

A Stochastic Frontier Approach to Measuring Inefficiency of Local Communities in Bosnia and Herzegovina

PhD, Associate Professor, School of Economics and Business

South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The significance and methods of measuring inefficiency of local communities has been gaining prominence in the last decade. The purpose of this paper is to...

A Stochastic Frontier Approach to Measuring Inefficiency of Local Communities in Bosnia and Herzegovina

Pubblicato online: 12 lug 2021

Pagine: 18 - 29

DOI: https://doi.org/10.2478/jeb-2021-0002

Parole chiave
local communities, technical inefficiency, stochastic frontier analysis, Bosnia and Herzegovina

© 2021 Lejla Lazović-Pita et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

A Stochastic Frontier Approach to Measuring Inefficiency of Local Communities in Bosnia and Herzegovina

Pubblicato online: 12 lug 2021

Pagine: 18 - 29

DOI: https://doi.org/10.2478/jeb-2021-0002

Parole chiavelocal communities, technical inefficiency, stochastic frontier analysis, Bosnia and Herzegovina

© 2021 Lejla Lazović-Pita et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Parole chiave
local communities, technical inefficiency, stochastic frontier analysis, Bosnia and Herzegovina