Nonparametric Spatial Frontier Models for Productivity Analysis: Evidence from EU Regions

Camilla Mastromarco and Leopold Simar

No 2025020, LIDAM Discussion Papers ISBA from Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA)

Abstract: This paper proposes a novel nonparametric panel data framework for estimating conditional production frontiers and efficiency measures that explicitly accounts for spatial interdependencies. By integrating recent advances in nonparametric frontier estimation with spatial panel data analysis, the proposed approach offers a flexible and robust framework for assessing productivity and efficiency in the presence of spatial interactions, explicitly accounting for both global and local spatial effects. By extending recently developed tools for estimating Malmquist productivity indices to conditional nonparametric frontier efficiency models, we provide a refined decomposition of productivity growth into technological change, efficiency change, and scale effects within a fully nonparametric framework. Applying this framework to a comprehensive dataset on European regions, we provide new evidence on spatial patterns of productivity growth and efficiency dynamics across the EU. The results reveal marked heterogeneity in regional performance and highlight the crucial role of spatial spillovers in shaping productivity outcomes. Ignoring these interdependencies can lead to mismeasurement of productivity trends, reinforcing the value of our proposed spatial nonparametric frontier approach for policy and performance analysis.

Keywords: Nonparametric Conditional Frontier; Panel Data Model; Spatial Dependence; Productivity Analysis; Malmquist Productivity Index; EU Regional Performance (search for similar items in EconPapers)
JEL-codes: C13 C14 C33 D24 O47 (search for similar items in EconPapers)
Pages: 28
Date: 2025-11-13
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