Malmquist index approach to efficiency analysis in selected old and new EU Member States

Abstract

The paper deals with an application of data envelopment analysis (DEA) to the performance evaluation of NUTS 2 regions in the four Visegrad countries in comparison with selected advanced European Union (EU) Member States – Austria and Germany – in the reference period 2000–2014. The main aim of the paper is to measure the efficiency changes over the reference period and to analyse the level of productivity in individual NUTS 2 regions based on the Malmquist Productivity Index (MPI). DEA is applied to assess how efficiently NUTS 2 regions use their inputs for output production. The analysis produces a ranking of the performance development of individual NUTS 2 regions through the MPI to assess the relative importance of productivity’s main components. The main purpose of this approach is to evaluate the numerical grades of efficiency of the economic processes within the evaluated NUTS 2 regions. Therefore, the efficiency of a region can be considered as a ‘mirror’ of regional competitiveness. The theoretical part of the paper is devoted to the fundamental basis of performance theory and the methodology of the MPI. The empirical part is aimed at measuring the degree of productivity and the level of efficiency changes of the evaluated NUTS 2 regions by measuring the change in technical efficiency and the movement of the production possibility frontier using the MPI. The final part of the paper offers a comprehensive comparison of the results obtained by calculating the MPI.