Comparative Efficiency Analysis of Economic Growth using a Nonparametric Approach

Proceedings of The 2nd World Conference on Management, Business, and Economics

Year: 2021

DOI:

[Fulltext PDF]

Comparative Efficiency Analysis of Economic Growth using a Nonparametric Approach

Aleksandra Marcikic Horvat, Boris Radovanov, Otilija Sedlak

ABSTRACT: 

The main goal of this paper is to evaluate relative efficiency of economic growth of European countries in 2019 using the input oriented Data Envelopment Analysis (DEA) model with a variable return to scale. The selected input variables are unemployment rate, inflation rate and tax revenue, while annual growth of gross domestic product (GDP) and annual growth of export of goods and services are used as output variables. The relative technical efficiency of 27 European Union countries and the Republic of Serbia have been compared and the results show that eleven countries (Czech Republic, Denmark, Greece, Ireland, Lithuania, Malta, Germany, Poland, Portugal, Romania and Spain) achieved maximal efficiency score. The average technical efficiency is above 80% which shows that observed countries efficiently allocate their resources in order to improve economic development. Furthermore, the results of DEA model suggest the ways for inefficient countries to improve their efficiency score in the future. Latvia, Luxemburg and Sweden achieved the lowest efficiency scores under 70%.

keywords: Data Envelopment Analysis; Economic Development; European Union; Relative Technical Efficiency; Republic of Serbia.