Productivity of Services in the Countries of Central and Eastern Europe: Analysis Using Malmquist Indices

This research aims to study the growth of productivity in the service sector in the formerCentral and Eastern European Countries (CEECs) and their determinants. For this purpose, nonparametricfrontier techniques were used to measure the variations in productivity and determine theexplanatory factors of these changes in total factor productivity; the methodology of the Malmquistindex with output orientation and its decomposition in technical change, pure technical efficiency andscale efficiency was used for the period 2000–2019. The results obtained indicate that the productivityof services in the most recently incorporated countries grew by 1.3 per 100 on average per yearcompared to 1.6 per 100 in manufacturing. The most important driver of such growth was found tobe improvement in technical change (frontier shift) rather than improvement in efficiency.