(NON-)CONVEX PRODUCTION METAFRONTIER FOR THE BALTIC STATES
(NON-)CONVEX PRODUCTION METAFRONTIER FOR THE BALTIC STATES

Summary/Abstract: The productive technology can be defined for different levels of aggregation (e.g., enterprises, economic sectors, economies). The groups of relatively homogenous observations can be established in order to model their performance with respect to the corresponding frontiers. The grand technology comprising all the frontiers is termed as the metafrontier. In this paper, we look into the dynamics of productivity of the three Baltic States, namely, Estonia, Latvia and Lithuania over the period of 2000-2016. We establish country-specific frontiers and a metafrontier in order to identify technological superiority of the countries against each other. What is more, we apply both convex and non-convex metafrontier in order to ascertain whether the underlying axioms impact the technological gaps. The results confirm the technological superiority of Estonia with regards to the other two Baltic states. Capital productivity requires improvement in Lithuania, whereas both capital and labour productivity gains are necessary in Latvia in order to approach the metafrontier.

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