  This paper introduces a new specification for the nonparametric
production-frontier based on Data Envelopment Analysis (DEA) when dealing with
decision-making units whose economic performances are correlated with those of
the neighbors (spatial dependence). To illustrate the bias reduction that the
SpDEA provides with respect to standard DEA methods, an analysis of the
regional production frontiers for the NUTS-2 European regions during the period
2000-2014 was carried out. The estimated SpDEA scores show a bimodal
distribution do not detected by the standard DEA estimates. The results confirm
the crucial role of space, offering important new insights on both the causes
of regional disparities in labour productivity and the observed polarization of
the European distribution of per capita income.
