METHODOLOGICAL DEBATE ON THE ‘REGIONAL INNOVATION SCOREBOARD’.
METHODOLOGICAL DEBATE ON THE ‘REGIONAL INNOVATION SCOREBOARD’.
Efficiency characterisation through Data Envelopment Analysis 5.3
FIGURE 10 RIS sub-indices. Basque Country vs. Valencia Region
The data represent the synthetic indicator for all RIS variables, and for three subgroups of variables Source: Drafted in-house based on European Union (2021b)
BASQUE COUNTRY VALENCIA REGION
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All indicators
The Data Envelopment Analysis (DEA) tech- nique is used to plot the aforementioned production possibility frontier in Figure 11, taking the input and output indices as the only production function arguments. It can be seen that this production possibility frontier is represented by those regions that obtain most outputs for each input level. In other words, the production possibility frontier is represent- ed by the linear combination of regions that establishes an upper limit on the output results obtained as a function of the amount of inputs invested in the system (i.e. no other region is capable of more outputs with the same level of investment). We can see that none of the Spanish regions (shown in blue in Figure 11) are part of this pro- duction-possibility frontier, although some of them are close to it. This is the case of Valen - cia Region, which is much closer to this frontier than the Basque Country, so Valencia Region will obtain a better result in terms of efficiency. (FIGURE 11) The DEA methodology can give us a meas- urement of the efficiency of each region compared to the series of regions considered, based on the distance of each region from the nearest point of the best practice frontier. We will obtain this efficiency measurement, but including multiple inputs and outputs. Our analysis will therefore not be of inputs and outputs aggregated into a single index (as in Figure 11), but rather will include the 5 inputs
I nputs
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for outputs, while the Basque Country obtains significant innovation outputs, these are not at the same level as the inputs invested (yellow point below the blue point). In turn, there are a number of Spanish Regions with higher out- puts than the Basque Country, such as Valen- cia Region, Catalonia and La Rioja. In the case of Valencia Region, there is a very large differ- ential between inputs (blue point in Figure 9) and outputs (yellow point), which means that, in terms of efficiency, Valencia Region enjoys a highly favourable relative position (i.e. high output/input ratio). As shown in Figure 10, the differences between the Basque Country and Valencia Region in- clude both outputs (Valencia Region has higher outputs than the Basque Country) and inputs (Valencia Region requires fewer inputs than the Basque Country). In other words, the results for Valencia Region seem better than those for
the Basque Country, despite the fact that it has fewer inputs and a local environment that is less conducive to innovation. (FIGURE 10) From this economic efficiency analysis per - spective, these results would indicate that Valencia Region will obtain greater system performance efficiency. Valencia Region will therefore be closer to the production possi- bility frontier (or best practice frontier) than the Basque Country, since the proportionality between outputs and inputs will be higher for Valencia Region than for the Basque Country.
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