DEA Efficiency Approach in Comparing Macroeconomic Performance of EU and Balkan Countries

The past two decades have witnessed the emergence of various types of crises – financial, economic and even health crises affecting adversely the economic development of countries worldwide. This has highlighted the role of public revenue and public spending as drivers for both economic recovery and the achievement of economic policy goals such as price stability, high economic growth and low unemployment. Despite the potential of fiscal policy to influence economic development, more active use of public spending and hence its increase does not always result in increased well-being and better macroeconomic performance of countries. This study examines the macroeconomic performance of countries from the European Union (EU) and Balkan countries over the period from 2004 to 2019. For the purposes of assessing macroeconomic performance and public spending efficiency, it uses Data Envelopment Analysis (DEA), a non-parametric method for estimating technical efficiency through the use of a single input – public spending as a percentage of GDP, and several macroeconomic indicators as outputs. Our findings indicate a decrease in the efficiency of the countries under examination and larger differences in terms of macroeconomic performance during the crisis years 2009 and 2012. Moreover, countries with more significant public spending in GDP terms tend to be less efficient than others, that have lower public spending levels.