A STOCHASTIC FRONTIER APPROACH TO MEASURING INEFFICIENCY OF LOCAL COMMUNITIES IN BOSNIA AND HERZEGOVINA

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Lejla Lazovic-Pita Lamija Šćeta

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.

Article Details

How to Cite
Lazovic-Pita, L., & Šćeta, L. (2021). A STOCHASTIC FRONTIER APPROACH TO MEASURING INEFFICIENCY OF LOCAL COMMUNITIES IN BOSNIA AND HERZEGOVINA. The South East European Journal of Economics and Business, 16(1), 18-29. Retrieved from http://journal.efsa.unsa.ba/index.php/see/article/view/1216
Section
Scientific and Professional papers: Economics and Business
Author Biographies

Lejla Lazovic-Pita, Associate Professor, School of Economics and Business, University of Sarajevo

Lejla Lazović-Pita, PhD
(corresponding author)
Associate Professor
School of Economics and Business, Department of Finance
University of Sarajevo, BiH
Address: Trg oslobodjenja-Alija Izetbegovic 1,
Sarajevo
E-mail: lejla.lazovic@efsa.unsa.ba
ORCID: 0000-0001-9421-1842

Scientific affiliation: Public finance

 

Lamija Šćeta, Associate Professor, School of Economics and Business, University of Sarajevo

Lamija Šćeta, PhD
Associate Professor, Department of quantitative economics
School of Economics and Business,
University of Sarajevo, BiH
E-mail: lamija.sceta@efsa.unsa.ba
ORCID: 0000-0002-0410-0311

Scientific affiliation: Number theory, applied mathematics