Global envelope method – new trend in determining economic potential of rural areas

Abstract

This paper uses the narrative method to critically analyze theoretical approaches and concepts related to the development of rural areas and discusses the identified research gap that allows for the search for new concepts and methodologies for determining the economic potential of rural areas. In the study, various statistical methods, including the new global envelope method and permutation tests, were used to calculate the economic potential of the global model and individual sub-models of the rural areas´ potential. The achieved results suggest that the sub-model calculation is more complex and time consuming than the calculation of the global model. The comparison has also shown that the degree of relevance of the individual sub-models is lower due to the application of four sub-test statistics compared to the one test used in the global model. The selected process thus complicates the identification of false-positive significant variables. Based on the results, it can be stated that the significant variables identified in each sub-model affect the economic potential of a given sub-model, and thus the overall economic potential of the municipality, when compared to the variables identified in the global model.