EFFICIENCY ANALYSIS OF THE BULGARIAN FORESTRY AND FOREST-BASED INDUSTRY: A DEA APPROACH

Abstract

The economic efficiency of forestry has long been a leading issue in the sector's economic research. The wide variety of policies, goals and models in forest management makes researching the factors of economic efficiency a constantly relevant issue. Since 1978 Data Envelopment Models have provided a comprehensive approach without following the particular assumptions for production function of forests. Data Envelopment Analysis (DEA) models are quite suitable to estimate the efficiency and determine the weaknesses of forests and forest-based industries with their current state and structural weaknesses. The current study estimates the relative efficiency of the Bulgarian forestry and forest-based industries comparing it to those in the EU. The methodology applied provides a specific approach for classifying the countries by the share of their sectoral GVA in comparison to the overall country GVA. The results confirm that the Bulgarian forestry and forest-based industries are efficient compared to most EU countries. The paper develops further the results that the efficiency varies based on the share of forestry and of forest-based industries in the country GVA. The results reveal that in countries where forestry is better involved than forest based industries, the efficiencies are higher. The study also suggests solutions for problems of small countries like Bulgaria in order to achieve better efficiency of their respective economic sectors.