Application of the DEA on the measurement of efficiency in the EU countries

Abstract

The purpose of the paper is to investigate the relative technical efficiency of the agricultural sector in the European Union (EU) using the Data Envelopment Analysis (DEA) during the period 2007-2011. The authors investigated efficiency using both the input and output-oriented models with the assumption of a variable return to scale. They looked for causes of inefficiency and made recommendations for inefficient agricultural sectors. The results show that, in average, the EU agricultural sectors performed efficiently, as evidenced by the relatively high value of the average input and output efficiency. The efficiency of the EU agricultural sectors had changed over the past few years, and in both models the efficiency has generally decreased over time. As the main source of inefficiency was labelled the input "total utilised agricultural area" and as the strength with a positive impact on efficiency, there was labelled the "crop output." By calculating the optimal values for the input and output variables for inefficient agricultural sectors, it has been found that for the efficient production of a given quantity of outputs, it was necessary to reduce the value of the input "total labour" in average by 6.18%, the "total utilised agricultural area" in average by 14.45% and the "total assets" in average by 5.93%. In case of the output-oriented model for efficient use of a given quantity of inputs, the agricultural sectors should produce up to 111.85% of their crop output and 113.41% of their animal output.

Keywords

• agricultural sectors in the european union
• agriculture
• data envelopment analysis
• technical efficiency dea
• technical efficiency