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The Trends of Technical and Allocative Efficiency in Lithuanian Family Farms

Abstract. The economic, or cost, efficiency can be decomposed into technical and allocative efficiencies. Technical efficiency is related to farm ability to transform inputs to outputs, whereas the allocative efficiency is the ratio of the observed and the optimal cost and measures farm’s ability to choose an optimal input-mix. The paper employed the cost Malmquist index to measure the changes in economic efficiency as well as the technological change. Therefore, the total factor productivity change was estimated for the sample of 200 Lithuanian family farms covering the period of 2004–2009. The results indicated that the cost productivity decreased by some 8%, whereas the total factor productivity – by 20% during the period. Declines in both pure technical efficiencies were the main drivers of the decrease, and the scale effect had almost no impact. 


Key words: efficiency, total factor productivity, Malmquist index, data envelopment analysis, Lithuania.


JEL code: C43, C44, C61, Q10, Q12.


Baležentis, T.; Kriščiukaitienė, I.; Baležentis, A. 2013. The trends of technical and allocative efficiency in Lithuanian family, Economic science for rural development: proceedings of the international scientific conference: Economic science for rural development „Production and Cooperation in Agriculture Finance and Taxes“ 30: 91–98. ISSN 1691–3078 [Web of Science (Conference Proceedings Citation Index); AGRIS; EBSCO].


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The Trends of Technical and Allocative Efficiency in Lithuanian Family Farms

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