Critical comparison of the main methods for the technical efficiency

The Technical Efficiency is a basic tool to determine the factors that slow down the production. TE aims at evaluating and comparing the operating performance of a set of production units, such as Companies, Offices, Hospitals, Banks, Schools, Transport Systems, etc. This paper, after an overview of the literature regarding the methodologies for measuring the Technical Efficiency, compares critically the two main approaches, the Data Envelopment Analysis (DEA) and the Stochastic Frontier Analysis (SFA). These methodologies are also discussed within an original application that targets to study the efficiency of European Countries with respect to the Gross Domestic Product (GDP).