Economic Efficiency and Total Factor Productivity of Defense Industries in NATO and EUROZONE

Abstract

The main purpose of this study is to analyze the efficiency and total factor productivity (MTFP) of the 12 defense industries in NATO and the EUROZONE with the data of the 2013-2017 period. GDP, defense expenditures, import for the defense industry and logistics performance index were used as input variables; while total sales and export values of defense industry were used as output variables in accordance with the data acquired from World Bank (WB) and SIPRI. Static DEA and MTFP were applied to data. According to findings of the CCR models; the USA, UK, France, Germany, Spain, and Netherland were observed as efficient DMUs in all years; whereas the other six countries were inefficient ones. Additionally, according to BCC model, only Turkey and Canada were observed as inefficient ones for five years. MTFP analysis revealed that Turkey and Germany were the two countries experiencing TFP in all periods.