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Technical Efficiency and Productivity Change in the European Union with Undesirable Output Considered

Djula Borozan
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Djula Borozan: Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek, Gajev trg 7, 31000 Osijek, Croatia

Energies, 2021, vol. 14, issue 16, 1-15

Abstract: Global competition and climate change are changing the nature of economic activity and impose the urgent need to have environmentally sensitive productivity growth. The paper addresses both desirable and undesirable output to assess technical efficiency and productivity changes, as well as evaluate the importance of an energy input in the production function and productivity change differentials in the European Union (EU) over the period 2000–2018. To that end, it uses output-oriented data envelopment analysis and Malmquist productivity analysis. The results reveal that the EU is facing significant challenges due to a decreasing trend in technical efficiency and slow productivity growth. The absence of major improvements in human resource performance has reduced the benefits of technological innovations which are the main source of productivity growth. Additionally, the results show that energy use did not critically influence efficiency and productivity.

Keywords: technical efficiency; productivity; environmental adjustment; data envelopment analysis; Malmquist productivity index (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
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