No. 78. REGIONAL AND SECTORAL EFFICIENCY OF THE GREEK ECONOMY: MEASUREMENT AND DETERMINANTS
S. Papaioannou, Th. Tsekeris, Ch. Tassis. 2017. | ISBN: 978-960-341-120-8
This study adopts a consistent econometric framework to measure the technical efficiency of regions and sectors of the Greek economy and identify factors which influence its evolution during 2000-2012. The econometric framework used in this study is based on the simultaneous estimation of a production function and a technical inefficiency equation. The findings reveal the existence of significant disparities in the levels of technical efficiency across regions and sectors of the Greek economy. The most efficient regions are those of Attiki, South Aegean and Western Greece. In contrast, Central Greece and Peloponnisos are the least efficient regions. With the exception of Attiki, all other regions marked a significant decline in their technical efficiency levels from 2008 onwards, indicating the adverse effects of the economic crisis on regional productivity and the widening of the productivity gap between Attiki and the remaining regions.
Similarly, most sectors of the Greek economy suffered a considerable fall in their efficiency after 2008. The most efficient sectors are those of real estate, public administration and financial intermediation, with average efficiency levels close to or above 80%. The least efficient ones are those of agriculture, forestry and fisheries, and professional activities, with average efficiency levels below 50%.
The findings of the study emphasize that urbanization economies and their dispersion as well as interregional market access contribute positively and significantly to the increase of regional efficiency, stressing the reinforcing role of both intraregional and interregional transport improvements in the productivity of the Greek economy. Moreover, regional specialization and sectoral concentration exert a significant and positive influence on the technical efficiency of Greek regions, signifying the importance of local activity clusters (such as industrial, logistics, science and technology parks) on productivity growth. Human capital (defined as the percentage of hours worked by people with tertiary education) also significantly improves the technical efficiency of Greek regions, denoting the need for investing in education.