Agricultural Productivity in Europe: Hicks-Moorsteen Productivity Index Analysis

Purpose: The aim of the study was to measure and analyse the productivity level of agricultural activity in 25 European Union countries and to analyse the factors influencing this level. Approach/Methodology/Design: The data covers the years 2009-2019 and was obtained from the EUROSTAT database. Aggregated Hicks-Moorsteen TFP total productivity indices were used for measurement and analysis. On the basis of the average productivity level, countries were grouped into groups based on the analysis of their position in the productivity index quartiles. Findings: European agriculture is diversified in terms of productivity. The level of productivity and its changes are determined, on the one hand, by changes in the level of effectiveness and, on the other hand, by changes in technology. The decomposition of productivity indices allows you to find these determinants. Practical Implications: The performed analysis allowed for grouping the surveyed countries in terms of the productivity of agricultural activity. The decomposition of productivity indices made it possible to find determinants of this productivity. The performed analysis can be used as one of the criteria for allocating funds to implement reforms and policies related to European agriculture. The results also make it possible to identify possible sources of increasing the level of productivity. Originality/Value: The presented research enriches the knowledge on agricultural productivity in the European Union. In addition, Hicks-Moorsteen total productivity indices were used, which are rarely found in publications in this area.