Efficiency in the European agricultural sector: environment and resources

Abstract

This article intends to compute agriculture technical efficiency scores of 27 European countries during the period 2005–2012, using both data envelopment analysis (DEA) and stochastic frontier analysis (SFA) with a generalized cross-entropy (GCE) approach, for comparison purposes. Afterwards, by using the scores as dependent variable, we apply quantile regressions using a set of possible influencing variables within the agricultural sector able to explain technical efficiency scores. Results allow us to conclude that although DEA and SFA are quite distinguishable methodologies, and despite attained results are different in terms of technical efficiency scores, both are able to identify analogously the worst and better countries. They also suggest that it is important to include resources productivity and subsidies in determining technical efficiency due to its positive and significant exerted influence.