A multi-criteria approach for

determination of investment
regions: Turkish case
Ergun Eraslan and Yusuf Tansel I

c
Department of Industrial Engineering, Baskent University, Ankara, Turkey
Abstract
Purpose The major aim of this research is to determine the socio-economic level of geographical
investment regions through fuzzy multi-criteria decision-making (MCDM) method. The results
obtained from this method are analyzed and compared with the current system and the differences are
interpreted.
Design/methodology/approach A user friendly MCDM method, the fuzzy TOPSIS, was selected
and ten independent criteria out of 53 were used, that have been evaluated by reduction according to
the correlations among them. Therefore, the rankings of the 26 geographical investment regions of
Turkey were calculated based on their criteria.
Findings The examinations of the rankings have shown that only four regions had similar
rankings but the rankings of the remaining 22 regions differed according to the authority rankings.
Furthermore, signicant differences have been observed for eight regions.
Social implications In globalization process, certain issues are of particular importance in
shaping the resource allocation policies of countries, through which they adjust their resources for
manufacturing and service sectors to the changing competitive conditions and govern the effect of
global economics on the human resources of their countries. The allowances taken from social and
economic criteria have indicated the inter-regional differences in terms of development.
Originality/value From a policy perspective, this study highlighted that a large number of social
and economic criteria failed in identifying homogenous groups of provinces and hence failed in
producing realistic policies. However, the proposed method signicantly contributed to obtaining
more accurate rankings by using fuzzy decision-making under multi-criteria.
Keywords Socio-economic level, Fuzzy TOPSIS, Multi-criteria analysis, Spearman correlation test,
Turkey, Decision making, Investments
Paper type Research paper
1. Introduction
The differences in the distribution of natural and social resources cause unbalanced
development courses in the countries. Expressions such as developed, developing,
and undeveloped are not only used to indicate the different development levels
between the countries but also those different development levels between the regions
within the same country. Population increase with migration waves to cities make it
difcult to provide municipal facilities such as drinkable water, electricity,
accommodation, education, and health services at satisfactory levels and causes
many urban problems such as, trafc congestion, crowd, noise, and environmental
pollution. Those factors prevent the fulllment of necessary public investments since
this meant a considerable amount of scal expenditure which is many times very
difcult to spare if not impossible for the governments and municipalities. Another
result of uneven development between regions reects the decit of undeveloped ones.
Migration towards developed regions are not only reducing the local population
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-5577.htm
IMDS
111,6
890
Received 16 December 2010
Revised 28 January 2011
Accepted 11 March 2011
Industrial Management & Data
Systems
Vol. 111 No. 6, 2011
pp. 890-909
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571111144964
but also reducing the dynamics of local development through loss of young workforce
and capital (Knox, 1996).
Strategic planners focused on the determination of development levels via
measurable and comparable social, economic, and cultural indicators. This kind of
research has contributed to both the success of present policies and to the infrastructure
of new up-to-date ones. Consequently, sustainable development concepts have emerged.
This concept is based on inter-regional consolidation, socio-economic balance,
increasing the quality of life, principle of equal opportunity, cultural development,
and participation policies. The new approach has broadened the scope of development
analyses (Dincer et al., 2003).
The development concept has multi-criteria factors including social, economic,
political, cultural, and structural variations throughout a whole country. This concept
utilizes the integrated approach (Cooke and Morgan, 1993). The alternative regional
development strategies to prevent imbalance and polarization are integrated to public
implementation. Additionally, geographical promotions and investment incentives
have become instruments of the balanced localization and development.
The socio-economic development level of the provinces or geographical regions has
become the main focus in literature. In recent years, studies have mostly focused on
health issues. Agirbasli et al. (2008) studied 640 Turkish adolescents living in the
middle socio-economic level and have observed the body mass index, blood pressure,
and effects of parental smoking habits on cardiovascular risk factors. Atallah et al.
(2006) observed higher prevalence and poorer control of hypertension in low
socio-economic areas and have demonstrated the complex relationship between the
factors and hypertension. Marmot and Friel (2008) studied the effect of social and
environmental conditions on health and Boyle et al. (2006) investigated the inuence of
economic development level on child health in the 42 developing countries. Education
has also been an important research area in these studies. Lindberg (2007) tried to
constitute the relationship between the type of transition and the socio-economic
prestige of employment obtained after graduation through regression analysis.
Additionally, Lamande et al. (2004) underlined the importance level of the economic
indicators for establishing international policies, Sun and Zang (2006) stated the
importance of socio-economic level on monetary liquidity and real estate bubbles for
foreign-dependent economies. Bonaiuto et al. (1999) investigated the perception of
residential environment quality and neighborhood attachment in the urban areas.
The socio-economic level was also important for waste management system, e.g. Cirelli
and Ojeda (2008) studied wastewater management and Li et al. (2008) long-term
waste-management strategies.
In previous public studies on the evaluation of the development level of the provinces,
gross domestic product (GDP) have generally been used as a dependent variable and the
economic, the social and the cultural criteria have been used as independent variables,
such as in path analysis and principal components analysis (McGranahan et al., 1985;
Castells, 1993; Benko and Dunford, 1991). These types of studies have generally rested
on pure statistics and on regression analysis. However, this approach seemed to be
inaccurate in many cases since it was not clear whether the criteria used had absolute
values or average values per head and since the intrinsic accuracy of these studies
regarding GDP was ambiguous. This situation is an inherent insufciency of these
perpetuated studies. Therefore, a multi-criteria approach can be considered as a more
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favorable approach to resolve the levels of the criteria and subcriteria. However, there
are limited numbers of studies in this area using this approach.
Although geographic regions with various socio-economic factors are typically
assessedinaninvestment decision, the determinationof the most appropriate geographic
region or province have been a very difcult decision because of wide diversity of
alternatives, inevitability of conicting multiple criteria that are both qualitative and
quantitative and the lack of standards and benchmarks about performance.
Constructing the hierarchical structure and/or establishing the decision matrices
have provided easier evaluation in this kind of research. This type of studies can be
easily transformed into multi-criteria decision-making (MCDM) problems. Based on the
authors literature survey it can be stated that MCDM is the most appropriate approach
applied to the selection problem. Therefore, there are several MCDM methods
presented in literature. The most common are AHP (Eraslan and Kurt, 2007), TOPSIS
(Isiklar and Buyukozkan, 2007; Yurdakul and Ic, 2009b), ELECTRE (Almeida, 2007),
and PROMETHEE (Brans and Vincke, 1985) methods. In this study, TOPSIS method
among the MCDM approaches is selected because of its advantages over others.
TOPSIS is a widely used MCDM technique because it has a simple and programmable
computation procedure (Chakraborty, 2011).
TOPSIS is used to obtain ranking scores and to rank the alternatives accordingly.
The main advantage of the TOPSIS approach is its user friendly application where
users may directly input judgment data without any previous mathematical
calculations. Besides, it can also be combined with other MCDM approaches such as
AHP (Yurdakul and Ic, 2009b; Ertugrul and Karakasoglu, 2009; Secme et al., 2009;
Amiri, 2010) and operations research models (Lin et al., 2011) to allow users to structure
complex problems. The monotonically increasing or decreasing utility of the TOPSIS
method makes it easy to dene and locate both the ideal solution and the negative ideal
solution. The concept of TOPSIS is that an alternative which is closest to the ideal
solution and farthest from the negative ideal solution in a multi-dimensional space is
the optimal choice (Deng et al., 2000).
In the traditional TOPSIS, human judgments are presented with crisp values.
Therefore, in many practical applications such as geographic region selection problem,
the human preference is uncertain and decision makers might be unable to assign crisp
values to the comparison of judgments. When the decision-maker faces an uncertain
problem and expresses his/her judgments as uncertain ratios, such as between three
and ve times more important, the standard TOPSIS steps, cannot be considered as
straight forward procedures. In order to overcome such short comings, a fuzzy extension
of TOPSIS was developed to solve the fuzzy problems. There are various studies that
incorporated fuzzy numbers into TOPSIS models in the literature (Amiri, 2010;
Secme et al., 2009; Ertugrul and Karakasoglu, 2009; Ebrahimnejad et al., 2010;
Chamodrakas et al., 2011). The fuzzy extension of the TOPSIS approach is also used to
rankthe feasible geographic regions inthis studyto take the advantages providedabove.
The primary purpose of this study is to determine the criteria of the socio-economic
development levels of the provinces and rank the development levels of them
accordingly. The secondary purpose is to present the homogenous geographical
investment regions by using the same data set.
In the following sections, the socio-economic criterion that is employed in this study
and a brief explanation of the fuzzy TOPSIS (FTOPSIS) method are presented.
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The rankings of the 26 geographical regions are calculated in fuzzy environment
and the comparison study with the current system is performed in the application
section. The study nishes with concluding remarks.
2. The Socio-economic criteria for development analysis
The determination of the development level of the provinces or investment areas
is required to elaborate the multi-criteria. Therefore, adequate evaluation criteria
must be included in every level of the study. The analysis reected only the
current status in the time windows. There are approximately 100 indicators to measure
the socio-economic level of 81 provinces of Turkey. The indicators measured by
various state organizations are used in the evaluation process. A total of 53 subcriteria
which were chosen from State Planning Organization (DPT)s study are used in this
study.
The level of development affects the people and the socio-economic level of these
provinces. In this context, it should be carefully considered that whether the global
indicators should be the average values or per head values. In addition, the effects of the
population on the socio-economic levels are not negligible. If the variables are used
per head according to the population, over-crowded provinces are affected negatively.
To prevent this disadvantage and increase the sensibility, some of the variables have
been taken as proportional or absolute values and a balanced analysis has been
performed.
The authority uses the main criteria in evaluation process under the titles of both
social and economic. This distinction has also grounded the actual facts of the
country and the studies in this area. For example, the socio-economic criteria were
evaluated in this way in the recent studies such as; Mandelik et al. (2010) in reviewing
of biodiversity indicators of ecosystems; Xie and Hou (2010) in determination of the
relationships with air quality in UK; and Oni et al. (2010) for household food security
and food industry. The social and economic indicators are also discussed separately in
various studies. Challinor et al. (2010) investigated the crop productivity in China using
the agricultural and prosperity criteria, Ekholm et al. (2010) underlined both health and
employment criteria in their health survey.
The socio-economic indicators were used in several studies about development
levels of provinces and management systems. Marques and Monterio (2001) used
the performance indicators in water utility management in Portugal, Lamande et al.
(2004) mentioned about measuring regional economic development in Russia, Turdean
(2008) prospected the social indicators for assessing the regional development level in
integration process to involve new institutional and nancial models, Firth et al. (2009)
examined how the Chinese state-owned banks allocated loans to private rms in
their capital allocation model. Furthermore, Ersoz and Bayrak (2008) measured the
commonalities and disparities of socio-economic indicators between Central Europe and
Turkey.
Consequently, the criteria are classied and stated as social and economic in the
rst level. The indicators of measured 53 subcriteria are used for the public
investments are shown in Figure 1 (Dincer et al., 2003).
The Figure 1 shows that there are some dependencies among the social and
economic criteria. It is necessary to supply independency to reduce them. The details of
the criteria developed in this study are described in Table I.
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Figure 1.
The classication and
relationships of the
socio-economic criteria
Socio-economic criteria
Social criteria Economic criteria
Demographic criteria
Employment criteria
Prosperity criteria
Education criteria
Manufacturing criteria
Infrastructure criteria
Health criteria Financial criteria
Agricultural criteria
Building trade criteria
Criteria Denition
The social criteria
Demographic criteria The criteria containing populations growth rate and spatial variability
and demographic components such as population, urbanization rate,
population density, and average households values
Employment criteria The portions of both the gainful occupation and employers of
agricultural, industrial and nancial institutions in the employment of
the provinces
Education criteria The educational indicators such as portions of literature, graduates,
and schooling rates
Health criteria The sustainable health services, doctor/patient ratio, child mortality,
hospital bed rates, etc.
Infrastructure criteria The benets from the services and the satisfactory technical
instruments in selecting the site of establishment such as electricity,
fresh water, and public transportation
Prosperity criteria The number of automobiles per head and the rate of electricity and
phone usage
The economic criteria
Manufacturing criteria The indicators included in all workplaces of public and private sectors
such as numbers of employees and employees, electricity consumption,
and value added tax per head
Building trade criteria The number of ats and housing zone per head in provinces
Agricultural criteria The agricultural production values per rural population and the rate of
this production
Financial criteria The nancial indicators reected in income levels, capital
accumulation, capital rate of return to investment, and import and
export values in the provinces
Table I.
Denitions of social
and economic criteria
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3. The fuzzy TOPSIS method
FTOPSIS approach (Chen and Hwang, 1992) has been frequently used as a ranking
method in multi-criteria decision analysis in recent decades. In many real life
applications, the human preference is uncertain and managers might be unable to
assign crisp values to the comparison judgments. The FTOPSIS approach is proposed
in literature for decision problems where uncertainty and imprecision are involved.
There are some studies that have incorporated fuzzy numbers into TOPSIS models in
recent years (Yurdakul and Ic, 2009a, b; Amiri, 2010; Ebrahimnejad, 2010; Ic and
Yurdakul, 2010; Chamodrakas et al., 2011).
In the FTOPSIS method, the criteria weights [ ~ w
j
; j 1,2, . . . , number of criteria(n)]
and the values of alternatives [(x
ij
); i 1, 2, . . . , m, j 1, 2, . . . , n] are inputs and are
specied in matrices as given in Step 1 (Negi, 1989; Chen and Hwang, 1992).
Step 1. Inputs are expressed in matrix form (equation (1)):
D
x
11
x
2
12
x
1n
x
21
x
2
22
x
2n
x
m1
x
m2
x
mn
_

_
_

_
1
The fuzzy numbers used in this study are determined as trapezoidal type by the
decision makers. If x
ij
is a trapezoidal fuzzy number as ~ x
ij
a
ij
; b
ij
; c
ij
; d
ij
_ _
, the fuzzy
weights can be dened by ~ w
ij
a
j
; b
j
; g
j
; d
j
_ _
.
Step 2. The normalized decision matrix is constructed using equations (2) and (3)
(Negi, 1989; Chen and Hwang, 1992). When x
ij
is fuzzy; its corresponding r
ij
must be
fuzzy. Let ~ x
ij
a
ij
; b
ij
; c
ij
; d
ij
_ _
and ~ x
j
b
2
j
; b
2
j
; b
2
j
; b
2
j
_ _
.
~ r
ij
~ x
ij
4~ x
*
j

a
ij
b
*
j
;
b
ij
b
*
j
;
c
ij
b
*
j
;
d
ij
b
*
j
_ _
; j [ I 2
~ r
ij
~ x
2
j
4~ x
ij

c
2
j
d
ij
;
c
2
j
c
ij
;
c
2
j
b
ij
;
c
2
j
a
ij
_ _
; j [ I
0
3
b
2
j
; b
2
j
; b
2
j
; b
2
j
_ _

i
max a
ij
; b
ij
; c
ij
; d
ij
; if j [ I
c
2
j
; c
2
j
; c
2
j
; c
2
j
_ _

i
min a
ij
; b
ij
; c
ij
; d
ij
; if j [ I
0
where I and I
0
are the set of benet and cost criteria, respectively.
Step 3. The weighted normalized decision matrix is calculated:
~
V ~ v
ij
_
mxn
i 1; 2; . . . ; m; j 1; 2; . . . ; n 4
where:
~ v
ij
~ r
ij
^~ w
j
5
Step 4. Each fuzzy number is defuzzied using equation (6) (Cheng and Lin, 2002). For a
trapezoidal fuzzy number ~ v
ij
a; b; c; d its defuzzication value is dened as:
Determination
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v
ij

a b c d
4
6
and defuzzied weighted normalized matrix (Chen and Hwang, 1992) determined as
equation (7):
V v
ij

mxn
; i 1; 2; . . . ; m; j 1; 2; . . . ; n 7
Step 5. The ideal solution, A
*
, is the best performance scores and the negative-ideal
solution, A
2
, is the worst performance scores. They are calculated using
equations (8)-(11). We assume for convenience that I
0
is the set of cost type measures
and I is the set of benet type measures:
A
*
v
*
1
; v
*
2
; . . . ; v
*
n
_ _
8
v
*
j

i
min X
ij
j [ I
0

_
;
i
max X
ij
j [ I j ; i 1; 2; . . . ; m
_ _
; j 1; 2; . . . ; n 9
A
2
v
2
1
; v
2
2
; . . . ; v
2
n
_ _
10
v
2
j

i
max X
ij
j [ I
0

_
;
i
min X
ij
j [ I j ; i 1; 2; . . . ; m
_ _
;
j 1; 2; . . . ; n
11
Step 6. The distance of an alternative i to the ideal solution (d
*
i
), and from the negative
ideal solution (d
*
j
) are calculated using equations (12) and (13):
d
*
i

m
j1
v
ij
2v
*
j

2

_
i 1; 2; . . .n; j 1; 2; . . . ; m 12
d
2
i

m
j1
v
ij
2v
2
j

2

_
i 1; 2; . . .n; j 1; 2; . . . ; m 13
Step 7. The ranking score (C
*
i
) is calculated using equation (14). The obtained ranking
scores represent the regional heads performance achievement. A higher score
corresponds to a better performance (Chen and Hwang, 1992):
C
*
i
d
2
i
=d
2
i
d
*
i
; 0 # C
*
i
# 1 i 1; 2; . . . ; m 14
4. Determining the development level of provinces with FTOPSIS method
The analysis of the model undertaken and determination of the weights (development
indices) are as follows the ve steps as follows.
Step 1. Organization of the expert evaluation team
Five-person team comprised of experts and academicians experienced in these studies
was organized so as to get their opinions in every level of the evaluation. The team
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possessed specic experience in determination of the criteria used in the
implementation phase and in criteria weights.
Step 2. Data collection
The data are classied as social and economic as described above. The social data were
taken from governmental institutions such as Turkish Statistical Institute, State
Planning Organization (DPT), Ministry of National Education, Ministry of Health,
General Directorate of Rural Services, General Directorate of Highways and Turkish
Telecommunication Administration. For the economic criteria, the data from Turkish
Statistical Institute, Undersecretariat of Foreign Trade, and Ministries of Industry,
Agriculture, and Finance were used. The most up-to-date data were collected for the
evaluation criteria (years 2005-2006) pertaining to 81 provinces of Turkey. The expert
team evaluated the 53 criteria during classication process stated in Section 2.
Step 3. The correlation test with criteria selection
Selection of criteria required application of formal procedures to obtain an independent
set of approximately 8 ^ 2 criteria in multi-criteria analysis (Miller et al., 1990;
Yurdakul and Ic, 2009b). Correlation tests are commonly used to measure the
dependency between two variables. Based on the outcome of the correlation test, if it
can be concluded that there is a relationship between two criteria, one of them will be
enough to predict their total behavior, and the other one can be eliminated.
The two hypotheses, namely:
H0. There is no positive relationship between the two criteria.
H1. There is positive relationship between the two criteria.
were tested with the correlation test. In the correlation test, correlation coefcient (r) is
used to test the hypothesis and calculated using equation (Montgomery, 1996). In the
equations, n is the number of input value pairs, X and Y are two selection criteria and
X and Yare their average values. The calculated value of r can range from 21 to 1;
and it is independent of the units of measurement. A value of r near 0 indicates little
correlation between criteria; a value near 1 or 21 indicates a high level of correlation
(Montgomery, 1996):
r

n
i1
X
i
2X Y
i
2Y

n
i1
X
i
2X
2
_ _

n
i1
Y
i
2Y
2
_ _

_
15
In the application of equation (15), (n) corresponds to the number of criteria and Xand Y
are the criteria specication values for the criteria pair whose correlation coefcient is
being calculated. The calculated correlation coefcient values for some criteria are
provided in Appendix Table AI. The calculated r values should be compared to a
pre-selected threshold value to eliminate the dependent criteria. In this study, the
threshold correlation coefcient value is selected as 0.65 and marked italics in Appendix
Table AI. The corresponding value of T-statistic of the two-tailed t-distribution
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with 51 degree of freedom is calculated using equation (16) as 6.108. This value
corresponds to 0.0005 p-value in the t-distribution ( p-value , 0.05):
T r

n 22
1 2r
2
_
16
Any criteria pair whose correlation coefcient value is ( p # 0.65 or p $ 2 0.65)
considered a correlated (dependent) pair. Using 0.65 as the threshold value, ten criteria
are selected out of 53 criteria. The independent criteria set includes population growth
(PG), birth rate (BR), potable water per head (PW), parcels of organized industrial zone
(PZ), public investment per head (PI), infant mortality rate (IM), inpatient bed
availability (BA), GDP per head (GP), agricultural production per rural population (AP),
and rate of agricultural production (RA) and these factors are given with the names of
geographical regions in Table II. Among these ten attributes PG, BR, PW, PZ, PI, BA,
GP, and RAare benecial in nature (where higher values are desirable), whereas, IMand
AP are non-benecial attributes (where lower value is desirable).
Step 4. Evaluation of the selected criteria in fuzzy environment
After determination of the criteria for the model, the weights to be used in evaluation
process were determined by the experts. The experts dened the trapezoidal fuzzy
Regions PG BR PW PZ PI IM BA GP AP RA
Istanbul 33.10 1.97 60.00 625 222.02 39.00 34.14 2,749.71 7.43 215.72
Ankara 21.38 1.90 98.54 13,041 425.53 36.00 37.71 2,587.87 872.69 263.96
Izmir 22.39 1.75 94.91 1,252 272.28 40.00 29.01 2,696.36 460.97 817.37
Bursa 22.61 1.90 94.92 1,797 458.00 40.33 24.57 2,147.74 178.02 764.06
Kocaeli 17.70 2.08 96.54 597 307.45 43.00 19.79 3,248.37 46.86 1,375.98
Tekirdag 13.55 1.73 95.17 636 188.99 37.00 22.22 2,321.52 311.50 1,029.73
Adana 21.75 2.53 84.71 634 169.05 44.50 20.85 2,065.14 228.56 404.70
Aydin 16.26 2.08 82.31 530 322.77 37.67 17.47 2,038.92 72.36 222.87
Antalya 31.25 2.03 89.75 330 238.00 32.33 25.17 1,700.30 109.11 75.35
Balikesir 9.15 1.82 91.74 517 271.11 37.50 22.95 1,887.75 76.93 278.24
Zonguldak 0.10 2.01 65.64 160 152.26 41.67 25.86 1,892.47 11.00 225.47
Manisa 9.99 2.33 89.06 1,657 98.92 42.00 21.29 1,578.51 83.17 229.71
Konya 21.32 2.89 92.03 1,110 126.56 41.50 14.68 1,447.60 58.30 128.45
Gaziantep 20.33 3.68 79.03 893 133.68 44.67 16.95 1,160.76 69.26 191.35
Hatay 12.82 3.15 86.73 334 188.15 37.00 10.58 1,311.48 33.68 102.49
Kayseri 8.73 2.74 96.93 769 268.58 46.67 22.51 1,152.16 94.96 190.75
Kirikkale 10.07 2.63 94.81 832 185.52 41.40 16.70 1,533.92 89.23 416.16
Samsun 5.19 2.65 89.53 793 222.84 47.75 22.03 1,332.77 108.82 1,111.11
Trabzon 9.32 2.40 81.35 270 289.33 35.50 21.80 1,160.48 528.66 84.30
Malatya 11.06 2.64 81.27 359 490.68 42.50 24.14 1,180.31 59.15 87.21
Kastamonu 0.09 2.31 83.21 238 237.05 46.00 29.01 1,275.85 87.05 84.44
Erzurum 7.43 3.11 93.92 344 246.13 48.67 27.27 917.43 66.10 26.53
Sanliurfa 29.09 4.67 71.02 566 378.38 47.00 14.77 926.77 29.51 16.20
Mardin 23.38 5.84 75.80 274 41.01 51.75 6.68 761.51 14.64 28.30
Agri 5.05 4.09 69.07 68 150.50 63.00 7.96 621.52 100.84 13.26
Van 25.47 5.48 76.57 100 140.26 55.75 11.17 610.53 19.36 13.92
Table II.
Decision matrix the
independent criteria
set (Step 1)
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weights to assign each criterion to evaluate the importance of each criterion.
The linguistic weighting variables are shown in Table III and the aggregate weights of
each criterion are given in Table IV.
Thus, the more accurate results are obtained with the selected criteria in the fuzzy
environment. Hence, FTOPSIS application steps are illustrated in Tables V and VI.
Step 5. The comparative analysis with the current model
The rankings obtained with the ten independent criteria were compared with the
rankings obtained with the DPT results. To determine the statistical signicance of the
benets achieved by the lower number of independent criteria, Spearmans
rank-correlation test was used. Spearmans rank-correlation test, which is a special
form of correlation test, is used when the actual values of paired data are substituted
with the ranks which the values occupy in the respective samples (Miller et al., 1990).
In this study, Spearmans test evaluated the similarity of the results (rankings of the
machine tools for various cases). To test the null hypothesis in the Spearmans test,
(H0), a test statistic, Z, was calculated using equations (17) and (18) and compared with
a pre-determined level of signicance a value. In this study, 1.645 was selected as the
critical Z-value at the level of signicance of a 0.05. If the test statistic computed by
equation (18) exceeded 1.645, the null hypothesis was rejected and it was concluded
that there is evidence of a positive relationship between the two sets of rankings. In the
equations (17) and (18), d
j
represents the ranking difference of machine tool j, K is the
number of machine tools to be compared and r
s
represents the Spearmans
rank-correlation coefcient:
Linguistic variables Weights
Very low (VL) 1,2,2,3
Low (L) 2,3,3,4
Medium low (ML) 4,5,5,6
Medium (M) 6,7,7,8
Medium high (MH) 7,8,8,9
High (H) 8,9,9,10
Very high (VH) 9,10,10,10
Table III.
Linguistic variables of
the importance weight
Criteria Weights
PG MH
BR MH
PW VL
PZ VL
PI L
IM ML
BA M
GP VH
AP L
RA VL
Table IV.
Trapezoidal fuzzy
weights of each
evaluation criterion
by three experts
Determination
of investment
regions
899
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Table V.
Weighted normalized
decision matrix for ve
criteria (Steps 2 and 3)
IMDS
111,6
900
r
s
1 2
6

K
j1
d
j

2
K K
2
21
_

_
_

_
17
Z r
s

K 21
_
18
The results are given in the columns under the main heading analysis of differences
in Table VII. The Spearman rank correlation test results show that the differences
between rankings are not statistically signicant (the Z-values, calculated in the last
rows 4.49, is above 1.645). Figure 2 shows the graphics of the rankings of the regions
utilizing both the two methods.
In Figure 2, the signicant differences in rankings are highlighted for eight
provinces. These geographic regions are Adana, Konya, Gaziantep, Hatay, Kayseri,
Trabzon, Malatya, and Kastamonu. It is thought that the calculated criteria weights
and balanced criteria usage contributed to these differences.
FTOPSIS results
Regions d
*
d
2
C
*
Rank
Istanbul 5.6646 17.9446 0.7601 3
Ankara 4.7853 18.0257 0.7902 2
I

zmir 4.4744 19.1470 0.8106 1

Bursa 5.8018 17.0341 0.7459 4
Kocaeli 6.8742 16.1830 0.7019 6
Tekirdag 6.9904 18.2847 0.7234 5
Adana 9.8217 12.1962 0.5539 11
Aydin 8.3892 14.4501 0.6327 9
Antalya 7.4265 16.1692 0.6853 7
Balkesir 8.3802 16.6745 0.6655 8
Zonguldak 10.6304 14.4280 0.5758 10
Manisa 10.7675 11.9223 0.5254 12
Konya 12.6119 9.7326 0.4356 18
Gaziantep 15.2636 7.5370 0.3306 22
Hatay 14.5263 7.5590 0.3423 21
Kayseri 12.9350 9.5364 0.4244 19
Kirikkale 12.2001 10.0177 0.4509 16
Samsun 12.7055 9.9958 0.4403 17
Trabzon 11.7258 11.3004 0.4908 14
Malatya 12.1929 10.4174 0.4607 15
Kastamonu 12.1387 12.1244 0.4997 13
Erzurum 14.5496 8.2655 0.3623 20
Sanliurfa 17.2795 8.1941 0.3217 23
Mardin 19.7222 6.1399 0.2374 25
Agri 18.3613 4.9593 0.2127 26
Van 19.1275 6.8443 0.2635 24
Table VI.
Calculation of FTOPSIS
ranking results
(Steps 4-7)
Determination
of investment
regions
901
5. Conclusion and discussion
In this study, FTOPSIS method was performed to evaluate the rankings of the
socio-economic development level of the provinces. The data related with the social and
economic criteria are collected from public enterprises and nancial institutions. The
selected 53 criteria were reduced by using inter-correlations among them and then the
obtained ten independent criteria were used to provide the independency principle of
the FTOPSIS method. The main advantage of this method is its simplicity and ability
to yield an indisputable preference order. Additionally, to prevent subjectivity of
decision makers, the evaluation has been carried out in the fuzzy environment. Human
judgments are presented with crisp values in the traditional TOPSIS. Therefore, the
human preference is usually uncertain and decision-makers might be unable to assign
crisp values to the comparison judgments in this study. When the decision-maker faces
a uncertain situation such as assigning criteria weights, his/her comparison judgments
as uncertain ratios, such as about two times more important, between two and four
times less important, etc. the standard TOPSIS steps cannot be considered as straight
forward procedures. In order to overcome this insufciency, a fuzzy extension of
TOPSIS is developed to solve the provinces ranking.
Analysis of differences
Regions FTOPSIS ranking results DPT results Difference
Istanbul 3 1 22
Ankara 2 2 0
I

zmir 1 3 2
Bursa 4 4 0
Kocaeli 6 5 21
Tekirdag 5 6 1
Adana 11 7 24
Aydin 9 8 21
Antalya 7 9 2
Balkesir 8 10 2
Zonguldak 10 11 1
Manisa 12 12 0
Konya 18 13 25
Gaziantep 22 14 28
Hatay 21 15 26
Kayseri 19 16 23
Kirikkale 16 17 1
Samsun 17 18 1
Trabzon 14 19 5
Malatya 15 20 5
Kastamonu 13 21 8
Erzurum 20 22 2
Sanliurfa 23 23 0
Mardin 25 24 21
Agri 26 25 21
Van 24 26 2
r
s
0.899
Z 4.49
Table VII.
The comparison of the
rankings for FTOPSIS
method and DPT results
IMDS
111,6
902
The collected data were categorized and classied under the observation of the expert
team and were also weighted accordingly. The ve experts described trapezoidal fuzzy
numbers in this stage which are more accurate and suitable. The decision matrices were
constituted and the steps of FTOPSIS method were followed. Thus, the rankings of the
development levels of provinces were obtained in homogenous groups.
The examination of rankings showed that only four regions had similar rankings
while the rankings of the remaining 22 regions differed according to the authority
rankings. In addition, there were signicant differences observed for eight regions.
The results of this study and high accuracy garnered in comparison with the current
system the previous utilized methods will be presented to the public authorities in
Turkey. The diversities demonstrated the sensibility of the fuzzy multi-criteria method
in this study.
In previous studies on this concept, GDPwas taken as the best evaluation criteria and
the analysts preferred to investigate the contribution rate of the criteria to the GDP.
Thus, the contribution level of all the criteria in the whole was taken into account. As
some of the values used were rate per head but others were absolute values, exact result
could not be obtained. The calculations are performed only with quantitative evaluation.
The contribution of the qualitative criteria to the evaluation systemis usually inevitable.
One of the alternative methods in those studies is the clustering analysis. In this type
of analysis, the relevant results are not obtained because of existence of multi-criteria,
quite often the subjectivity is obligatory and additionally, the evaluation scale became
Figure 2.
The ranking differences
of provinces
28
FTOPSIS DPT
27
26
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
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5
4
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1
0
I
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a
n
b
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V
a
n
Determination
of investment
regions
903
empirical after further replications. The results of these analyses were not acceptable
according to the proof marks.
Most of the methods utilized in the previous studies are not relevant to these
analyses. This type of studies has generally depended on statistics and regression
analysis, such as path analysis and principal components analysis. This situation is
the deciency of these perpetuated studies since the criterion used in these studies has
only quantitative features. Moreover, this kind of research could not be described as a
multi-criteria problem. Thus, FTOPSIS method, which is inhold all the specications
required above, is preferred in this problem.
The Helsinki European Council in 1999 decided that Turkey is a candidate country
that can join the union on the basis of the same criteria as applied to the other candidate
countries. Turkey will benet from a pre-accession strategy to stimulate and support
its reforms. Two years later, the accession partnership with Turkey was adopted by
the council and the National Program for the Adoption of the Acquis was approved by
the government (TR Prime Ministry State Planning Organization, 2003).
In order to provide the general framework, a medium-term regional development
strategy of Turkey for 26 NUTS II regions (nomenclatures of territorial units for
statistics II) is developed. It should be noted that there are signicant differences
between the economic and social development levels of 26 NUTS II regions in Turkey
as well as between that of Turkey and many European Union countries. Therefore, it is
necessary to ensure convergence in the eld of economic and social cohesion to
implement successful regional programs aiming the reduction of regional inequalities.
A human-oriented development approach targeting effective activation of economic
and social potentials of regions is adopted in this strategy. On this basis local
development, initiatives will be supported, institutional capacities will be developed,
funds will be provided for infrastructure investments and rural development will be
promoted. Thus, the main objective is to reduce economic and social inequalities
between regions by stimulating job creation and increasing competitive powers of less
developed regions. Supporting and strengthening of small- and medium-sized
enterprises, supporting small-scale infrastructure construction, supporting local
initiatives, building, and strengthening institutional capacity are the priority elds of
medium-term regional development strategy at national level.
The socio-economic evaluation required for the effective management of the
medium-term regional development strategy is achieved more precisely through
FTOPSIS approach that employs the information about the geographic regional
factors. The outcomes of the study are expected to guide the selection of developing
provinces more effectively and to improve the efciency of public funds.
The evaluation of public fund performance has not been analyzed effectively in
applications. In order to manage these funds, evaluation procedures would be performed
in details and the obtaining feedback information should be provided for selecting the
developing provinces for the future works (Moon and Sohn, 2005). In recent years,
various kinds of public funds have been devoted to select under developed provinces in
Turkey, but their effects have not been evaluated so far. In order to ensure effective
management of such funds, the feedback regarding to the achievements of previous
funds is required in the selection of developing provinces in future.
The socio-economic evaluation based on FTOPSIS approach for the effective
management of the public funds with information about the geographic regional
IMDS
111,6
904
factors is eventually obtained. The results of the study are expected to guide the
selection of developing provinces and improve the efciency of public funds.
In order to recommend further approaches that can be used for the performance
evaluation of the funds, the environmental factors in details are needed so as to reect
the present conditions of them. More specic performance variables should also be
known to appraise the performance of public funds more realistically. This problem is
left for further research.
Consequently, the proposed model is highly exible for the intended use by
changing the criteria weights. For example, the socio-economic ranking level of the
regions can be a reliable reference for loan distribution of the banks to the regional
branches and can be used as a guide model for both the public and private sectors in
their studies to prevent inter-regional disparity.
This study also examines how the state-banks in Turkey allocate their commercial
or private loan budgets to provinces. Basing on these results of the study (ranking of
provinces) state-banks can extend their loans to developing provinces, which implies
that they use commercial judgments in this segment of the market.
In addition, FTOPSIS method can also be combined with operations research
models. We nd also that FTOPSIS results appear to be used in Turkish private banks
commercial loans decision-making processes. For example, an integration of FTOPSIS
and mathematical programming method is proposed to consider both tangible and
intangible factors in choosing the best provinces and in determining the optimum
regional credit concentration limits among them.
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Corresponding author
Ergun Eraslan can be contacted at: eraslan@baskent.edu.tr
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints
IMDS
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Appendix
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0
.
3
4
2
7
0
2
0
.
5
9
0
3
0
2
0
.
7
2
6
8
0
0
.
7
1
6
3
0
.
.
.
0
.
6
6
7
9
0
6
2
0
.
1
9
4
7
0
2
0
.
2
4
8
9
0
0
.
2
2
1
5
0
2
0
.
1
6
8
3
0
2
0
.
3
4
2
7
0
1
.
0
0
0
0
0
0
.
9
0
2
3
0
0
.
4
2
4
2
0
2
0
.
5
2
1
2
0
.
.
.
2
0
.
6
2
3
6
0
7
2
0
.
2
8
8
4
0
2
0
.
3
9
4
6
0
2
0
.
0
4
3
9
0
2
0
.
2
1
7
9
0
2
0
.
5
9
0
3
0
0
.
9
0
2
3
0
1
.
0
0
0
0
0
0
.
5
8
2
0
0
2
0
.
6
4
0
5
0
.
.
.
2
0
.
7
6
0
7
0
8
2
0
.
7
2
6
2
0
2
0
.
8
7
0
6
0
2
0
.
4
5
8
0
0
2
0
.
6
1
1
1
0
2
0
.
7
2
6
8
0
0
.
4
2
4
2
0
0
.
5
8
2
0
0
1
.
0
0
0
0
0
2
0
.
8
6
0
7
0
.
.
.
2
0
.
7
5
4
6
0
9
0
.
6
2
3
3
0
0
.
7
1
7
5
0
0
.
3
6
4
2
0
0
.
6
0
8
2
0
0
.
7
1
6
3
0
2
0
.
5
2
1
2
0
2
0
.
6
4
0
5
0
2
0
.
8
6
0
7
0
1
.
0
0
0
0
0
.
.
.
0
.
7
0
0
1
0
.. .
.. .
.. .
.. .
.. .
.. .
.. .
.. .
.. .
.. .
.. .
.. .
5
3
0
.
6
3
2
4
0
0
.
5
3
1
7
0
0
.
2
8
2
0
0
0
.
5
5
4
3
0
0
.
6
6
7
9
0
2
0
.
6
2
3
6
0
2
0
.
7
6
0
7
0
2
0
.
7
5
4
6
0
0
.
7
0
0
1
0
.
.
.
1
.
0
0
0
0
0
Table AI.
The criteria correlation
matrix
Determination
of investment
regions
909