Dynamics of productivity taking into consideration the impact of energy consumption and environmental degradation

Abstract

This study deals with the nonparametric frontier analysis in the case of the EU 28 countries for a period spanning from 1993 to 2015. It provides statistical inference about the radial output based measure of technical efficiency under the assumption of Constant Returns to Scale (CRS) and it performs scale analysis that allows determining the nature of scale inefficiency of each data point. Furthermore, an order-α approach is developed for determining partial frontiers. Both traditional Malmquist-Luenberger and bootstrapped Malmquist productivity indexes between 1993 and 2015 are constructed. Analysis of productivity change by decomposing the Total Factor Productivity Index into Efficiency Change and Technical Change is performed showing respectively whether productivity gains derive mainly from improvements in efficiency or are mostly the result of technological progress. In this sense, the results can provide European policy makers with an improved understanding of the process of technological and efficiency change helping them to improve the design of their environmental and energy policies.