Efficiency of the Bosnian-Herzegovinian Economy
The aim of this paper is to analyse the issue of efficiency its components for Bosnia and Herzegovina (BIH) and a group of its comparator countries.
We estimate a global production/efficiency frontier and a frontier for small Central and South East European countries (comparator countries) from 1950 to 2014 and from 1996 to 2014 respectively.
The KWH (“Kumbhakar-Wang-Horncastle”) decomposition of efficiency using Stochastic Frontier Analysis (SFA) is applied to the respective countries to evaluate the effects of changes in efficiency. Comparing the efficiency of comparator countries and BIH, and recognizing country heterogeneity, we examine whether there is the evidence of efficiency convergence, i.e. whether BIH moves toward the respective efficiency frontier.
According to our research, BIH is lagging behind some comparator countries (Switzerland, Austria, Slovenia and Macedonia) after the global crises of 2007.
KeywordsCobb-Douglas parametric frontier model Efficiency Bosnia and Herzegovina
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