Investigating the effect of efficiency and technical changes on productivity

Better management of natural capital, an efficient allocation of resources and technological progress can contribute to productivity change. The present study uses Data Envelopment Analysis to determine the Total Factor Productivity Index, in the case of the EU15 countries, using panel data on energy consumption for a period spanning from 1995 to 2011. The aim is not only to determine the index of total factor productivity change but also to record its driving forces for the decision making units under consideration, showing whether the productivity gains come mainly from an improvement in efficiency or derive merely as a result of technological progress. In terms of eco-efficiency, the paper contributes in showing whether the overall development is more driven by input-saving or environmental-saving processes. The detailed decomposition offers policy makers additional insights into more valuable reference material representing the driving forces of productivity gains or losses.