Contemporary approaches to measuring competitiveness – the case of EU member states

Abstract

Competitiveness represents a concept that has occupied a great deal of the economic theorists’ attention for decades. Due to its complexity and different perceptions, it has not been uniquely defined yet and neither has its measurement system been completely developed. The problem of the conducted research arises from the fact that the countries mostly due to structural and other constraints in the economy (or in cases where they have high levels of GDP) do not use the available inputs in the best way, i.e. they do not achieve a satisfactory level of economic efficiency, which is then reflected on the competitiveness of their economies. The aim of the research paper is to demonstrate how a combination of using Data Envelopment Analysis Method (DEA) and the Global Competitiveness Index (GCI) in ranking the countries according to the macroeconomic competitiveness is more realistic than it is in the case of using the traditional indicators. In the paper, in evaluating the competitiveness of selected EU Member States the Data Envelopment Analysis Method (DEA) is used. Based on the previous researches and our research results it is found that the traditional indicators of competitiveness are incomplete because they do not consider the macroeconomic efficiency of the country. Therefore, we propose to apply a combination of GCI and the efficiency results obtained by DEA in order to achieve a more realistic evaluation of macroeconomic competitiveness. As a key outcome of the research, the new measure of competitiveness is proposed: a combination of traditional competitiveness indicator and the results of the evaluation of countries’ macroeconomic efficiency obtained by applying BCC model of DEA method.

Keywords

• Data Envelopment Analysis (DEA)
• EU
• efficiency
• inefficiency
• macroeconomic competitiveness