Assessing Aggregate Cost Efficiency And The Related Policy Implications For Greek Local Municipalities

AbstractThe assessment of local government performance is a major issue for a number of industrial countries since local municipalities are assuming increasingly more responsibility in terms of providing essential services to their taxpayers. In fact, the decentralisation of decision-making from central governments to local municipalities has made the measurement and evaluation of their performance critical. In this paper, a two stage methodology is proposed as a comprehensive approach to measure the performance of local municipalities. During the first stage, efficiency performance is measured using mathematical programming and econometric frontier approaches. A second stage is proposed where the impact of policy making factors on the efficiency measures obtained from the first stage is evaluated. The policy implications of cost efficiency are investigated by grouping local municipalities within clusters of similar performance characteristics and also by identifying the determinants of their cost efficiency using censored regression models. The approach is implemented by studying the performance of Greek local municipalities.RésuméEvaluer la performace des gouvernement locaux est une préoccupation majeure dans bon nombre de pays industrialisés du fait que les municipalités assument de plus en plus de responsabilités pour dispenser leurs services aux contribuables. En fait, la décentralisation de la prise de décision des gouvernements centraux, au profit des municipalités, a rendu primordiale l'évaluation de performance au niveau local. Dans cet article, une methodologie en deux phases est proposée pour measurer la performance des municipalités. La première phase consiste à obtenir une mesure d'efficacité à l'aide de deux approches: programmation mathématiques, et frontière économique. Ensuite, une seconde phase est proposée pour évaluer l'impact de décisions politiques sur les mesures obtenues lors de la première phase. Les implications politiques liées à l'efficacité des coûts sont générées en groupant les municipalités par ordre de grandeur de performance, et aussi en identifiant les determinants liés l'efficacité de coûts en utilisant des modèles de régression. L'approche est mise en oeuvre pour étudier la performance de municipalités GrèquesKey words:: Measurement and Evaluation of Local Municipality PerformanceData Envelopment AnalysisStochastic FrontiersTobit ModelsFuzzy K-Means Cluster AnalysisLocal Greek Municipalities Additional informationNotes on contributorsKonstantinos P. TriantisKonstantinos Triantis is the Director of the System Performance Lab and the Academic Director of the Master of Engineering Administration Program at Virginia Tech in the Department of Industrial and Systems Engineering. His has research interests in the areas of performance measurement and evaluation of production processes, design of quality management and performance measurement systems, algorithms for query processing for distributed database management systems, and methodologies for cost engineering. He has published in leading academic journals and has conducted sponsored research work for the U.S. Navy, United States Postal Service, Washington Post, American Red Cross, NASA, and for circuit board manufacturing facilities.