Productivity patterns in Europe: adaptation of the Malmquist index to measuring group performance and productivity chang
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Productivity patterns in Europe: adaptation of the Malmquist index to measuring group performance and productivity change over time Martin Boďa1,2 · Mariana Považanová1
© Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract The paper proposes an extension of the methodology for measuring productivity change based on the Malmquist index that now affords consistent comparisons of productivity change and productivity levels in situations when there are groups of several units monitored in periods of several years. The extended measurement of productivity change is handled in the framework of data envelopment analysis and is applied in two respects in order to analyze productivity patterns of 17 European countries divided into two groups: higher-productivity economies and lower-productivity economies. First, their group-wise productivity changes and productivity differences are examined for the periods 2003–2008 and 2010–2015 divided by the critical crisis year 2009. Second, their absolute and conditional convergence is studied accommodating several specifications of growth regressions. The results confirm that higher-productivity economies preserved their lead in productivity despite the crisis, albeit the productivity differential between higher-productivity and lower productivity economies slightly waned. This is obviously owing to the fact that lowerproductivity economies display faster convergence tendencies. Keywords Productivity · Productivity change · Group performance · Malmquist index · Data envelopment analysis · European countries · Convergence JEL Classification D24 · O47 · O52
* Martin Boďa [email protected] 1
Faculty of Economics, Matej Bel University in Banská Bystrica, Banská Bystrica, Slovakia
2
Faculty of Natural Sciencies, Jan Evangelista Purkyně University in Ústí nad Labem, Ústí nad Labem, Czech Republic
13
Vol.:(0123456789)
Empirica
1 Introduction Central to the present paper are issues of total factor productivity (TFP) growth and TFP convergence in 17 European countries. These issues have occupied researchers for some time and have resulted in a massive body of literature regardless of whether the topic is tracked along the direction of measuring productivity change or convergence (see e.g. Islam 2003; Wolff 2013, pp. 70–156). The motivation is clear and certainly cannot be expected to diminish over time since productivity is deemed indisputably vital to economic prosperity and welfare and there will always be richer and poorer economies with a gap in performance and a difference in growth trajectories. One of the reasons why TFP convergence should be studied is that TFP is the closest measure of technology and underpins not only the orientation and speed of technological catch-up, but almost exhaustively the long-run orientation and growth of the entire economy (e.g. Islam 2003, p. 213; Baumol and Blinder 2012, pp. 105, 132–134; Levenko et al. 2017, p. 6).1 Inasmuch as economic growth can be secured either by factor augmentation (i.e. by employin
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