Are EU Candidate Countries Ready for the Single Market? Comparing Performance with an EU Benchmark
The process of the East-West integration has come to a point that enlargement appears inevitable. But are these countries really ready to join the EU in terms of competitive performance? Firstly, we construct a virtual best practice production frontier for .rms active in a European Union member state (EU) and firms in Central and East European (CEE) countries. By means of this common benchmark, we make inferences about the relative technical efficiency of firms in candidate countries. We show that technical efficiency is higher in the EU, however, firms in CEE countries are converging towards the EU average. We show that efficiency is not only dierent between countries, but even within countries. The latter suggests the need to look at industry-level technical efficiency. Secondly, we combine two existing techniques to develop a methodology to estimate firm level total factor productivity (TFP) change, decomposed into technical change, technical eæ²œiency change and a scale component. It is mainly technical change that drives the change in TFP, i.e. technological progress. Firms in EU candidate countries are reallocating resources under decreasing returns to scale, leading to an increase in TFP. We suggest interpreting efficiency estimates as measures of firm heterogeneity.
|Date of creation:||2002|
|Date of revision:|
|Contact details of provider:|| Postal: De Bériotstraat 34, B-3000 Leuven|
Phone: +32 (0) 16 / 32 6598
Fax: +32 (0) 16 / 32 6599
Web page: http://www.econ.kuleuven.be/licos
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
- Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181, December.
- Gérard Roland, 2004.
"Transition and Economics: Politics, Markets, and Firms,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 026268148x, March.
- Gérard Roland, 2000. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182033, March.
- Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
- Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
When requesting a correction, please mention this item's handle: RePEc:lic:licosd:12302. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.