Measuring sustainable governance in the European Union

This paper examines the problem of measuring sustainable governance in the European Union (EU-27) through the use of duality and the Slutsky equation. The proposed methodology is based on the application of a three-dimensional optimisation model, where the arguments of the objective (sustainable social welfare) function are economic goods that contribute to sustainable economic growth; environmental goods that provide for sustainable environmental protection; and social goods through which sustainable social development is achieved. The dual problem, formulated through this three-dimensional theoretical model, is solved to find the optimal solution, indicating a certain sustainability level. We suggest that this solution can be used for calculating the value of what we define here as the sustainable governmental policy indicator, which is considered to provide quantitative measurement of government policies on sustainable development within the context of 'good governance'. Furthermore, it is suggested that the Slutsky equation can be used as a reliable method for long-term monitoring and planning of national as well as international good governance with regard to sustainable development policies. In its empirical part, the paper applies the theoretical model in an analysis of the sustainable development indicators (as set out in the Sustainable Development Strategy (SDS) of the EU) in Bulgaria for the period 2000-2010 and compares them to those of the EU-27.