ASSESSING THE EFFICIENCY OF LITHUANIAN TRANSPORT SECTOR BY APPLYING THE METHODS OF MULTIMOORA AND DATA ENVELOPMENT ANALYSIS

Abstract

This study focuses on evaluating Lithuanian transport sector throughout 1995–2009 by applying multi–criteria decision making method MULTIMOORA (Multi–Objective Optimization plus the Full Multiplicative Form) and data envelopment analysis (DEA). MULTIMOORA provided ranks that enabled to perform time series analysis, whereas DEA made possible to identify both technical and scale inefficiencies. Due to limited data availability, we analyzed the transport sector as a whole, i. e. it was not decomposed into that of land, air, railway or water. Although every production factor, including labour, capital and land is required for developing the transport sector, due to limited data availability, it is not possible to tackle them all when performing analysis. Consequently, one input, namely energy consumption in transport, was considered in the conducted analysis. On the other hand, two forms of transport – passenger and freight transport – were distinguished, and each of them was measured using composite indicators of passenger and tonne kilometres respectively. These two indices were considered as the outputs of transport sector activity. The final ranks provided by MULTIMOORA indicate that the transport sector was operating most effectively during 2004–2008, whereas it exhibited relative inefficiency throughout 1996–1998. The application of DEA suggests that the efficiency downturn of 1996–1998 might have been caused by technical inefficiency, whereas that of 2008–2009 was driven by scale inefficiency. Indeed, the technical modernization of the transport sector as well as the resolution of resource allocation problems might have lead to an increase in technical efficiency. Meanwhile, economic downturn prevents the transport system from working at full capacity; hence, scale efficiency is still observed.