The Comparative Efficiency Analysis of EU Members Agriculture Sectors

Laurinavičius, Eligijus; Rimkuvienė, Daiva

The Comparative Efficiency Analysis of EU Members Agriculture Sectors

2017

Laurinavičius, Eligijus | Rimkuvienė, Daiva

Production economics forms a very important part of an enormous range of economic theory. Agricultural production is no exception. When evaluating the competitiveness of the multifunctional agriculture, it is necessary to use the measure of efficiency instead of productivity. The conception of the efficiency is explained and the methods for measurement are provided. The authors discuss the methods of Stochastic Frontier Approach (SFA), Free Disposal Hull (FDH) and Data Envelopment Analysis (DEA) that are particularly useful for multi-criterial evaluation of multifunctional processes. Those methods assign an efficiency score to each Decision Making Unit (DMU) based on how well it transforms a given set of inputs into outputs. Most studies have only focused on application of DEA method for assesment of the efficiency of agriculture farms. There is still a need on applications for sectors. This paper provides an examination of the applicability of DEA method to agriculture sectors efficiency measurement. By applying mathematical models, which are based on the DEA, the efficiency of agriculture in each EU country was evaluated.

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