Testing Differences in Efficiency of Regions within a Country: The Case of Ukraine

Journal of Productivity Analysis, Vol. 32, No. 2, pp. 81-102, 2009

Posted: 19 Sep 2010

See all articles by Pavlo Demchuk

Pavlo Demchuk

Rice University - Department of Economics

Valentin Zelenyuk

School of Economics, Centre for Efficiency and Productivity Analysis, The University of Queensland, Australia

Date Written: February 9, 2009

Abstract

In this paper we synthesize and adopt the recently developed methods in efficiency analysis to the case of comparison of regions within a country. We take Ukrainian regions as a subject of investigation, yet the same toolkit can be applied to test disputable differences in productivity for many other countries where such questions can be of national concern (e.g., Belgium, Great Britain, Spain, etc.). Contrary to common perception of economists focusing on Ukraine, we find no significant differences in distributions and aggregate efficiencies between the agricultural and industrial regions, neither between western (mostly Ukrainian speaking) and eastern (mostly Russian speaking) regions of Ukraine. However, we find strong support for a rapidly increasing gap between the capital (Kyiv) and all the regions since 2001. Using truncated regression analysis with bootstrap we also find robust evidence that the inefficiency of regions is positively related to alcohol and tobacco consumption, the amount of foreign direct investment and inversely related to criminality in the region. On the other hand, we also find strong evidence that amount of capital in the region and its wealth is positively associated with efficiency level of this region.

Keywords: Ukraine, Efficiency Convergence, Regional Performance, DEA, Bootstrap

JEL Classification: O47, O52, P25, P27

Suggested Citation

Demchuk, Pavlo and Zelenyuk, Valentin, Testing Differences in Efficiency of Regions within a Country: The Case of Ukraine (February 9, 2009). Journal of Productivity Analysis, Vol. 32, No. 2, pp. 81-102, 2009, Available at SSRN: https://ssrn.com/abstract=1679168

Pavlo Demchuk (Contact Author)

Rice University - Department of Economics ( email )

6100 South Main Street
Houston, TX 77005
United States

Valentin Zelenyuk

School of Economics, Centre for Efficiency and Productivity Analysis, The University of Queensland, Australia ( email )

530, Colin Clark Building (39)
Brisbane, 4067
Australia

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