Spatial Solution to Measure Regional Efficiency - Introducing Spatial Data Analysis (SDEA)

The main objective of this paper is to introduce a new approach to measuring efficiency in regional studies through SDEA (Spatial Data Envelopment Analysis). The paper offers a proper mathematical elaboration and a highlight of the differences between classic DEA and newly developed method. Presented literature review and the discussion on theoretical examples, proves the need for new solution to measure regional efficiency, which takes into consideration region-specific spatial context. The introduced method, SDEA, incorporates explicitly spatial interactions (via the 𝐗� matrix) into the model through spatially weighted inputs and outputs. An example study concerning healthcare efficiency of European regions will be presented to illustrate SDEA. We confront the efficiency results of classic DEA with results of SDEA, which is expanded by the spatial equivalents of inputs and outputs. The results suggest that classic DEA undervalues the regional healthcare efficiency, underestimating the region-specific spatial context.