Publication detail

Institutional Efficiency of Selected EU and OECD Countries using DEA-like Approach

Author(s): PhDr. Jana Votápková Ph.D., Milan Žák
Type: Articles in journals with impact factor
Year: 2013
Number: 2
Published in: Prague Economic Papers
Publishing place:
Keywords: Efficiency, institutions, Worldwide Governance Indicators, PCA
JEL codes: C61, E02
Suggested Citation:
Abstract: The paper estimates institutional efficiency of a homogeneous sample of EU and OECD
countries. We employ an output-oriented Data Envelopment Analysis (DEA-like) approach where six Worldwide Governance Indicators published by the World Bank in 2009
constitute a vector of outputs. Assuming that all countries should aim at the same level
of institutional quality, inputs were considered unimportant. The results, as to in which
areas and how much individual countries need to improve, were not surprising. Concern-
ing the overall efficiency scores and rankings, the most institutionally efficient countries
are situated in northern Europe. The Czech Republic ranked 24th in the overall sample
and 3rd among new member states. The biggest necessary improvements there are in the
area of government effectiveness and control of corruption. The robustness check using
Principal Component Analysis revealed significant qualitative correlation with the DEA-
like results, with the correlation coefficient of 0.9653. We propose that both sets of results
could be used equally as explanatory variables in growth and other regressions.




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