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Business & Economics

Multi-Objective Economic Evaluation of the European Union Member States. As Opposed to Credit Rating Agencies Opinions?
Willem Karel M. Brauers, Edmundas Kazimieras Zavadskas

ABSTRACTCredit Rating Agencies rate countries economic growth drivers by internal experts but with a final qualitative judgment by the management acting as decision makers and being judge of one’s own case. These ratings influence the countries credit rating and ipso facto of their enterprises. Is a more scientific approach, eventually on a quantitative basis, not possible? Therefore, MULTIMOORA, a quantitative method, is suggested. MULTIMOORA compares multiple objectives expressed in different units as much as possible on a non-subjective basis. In opposition to similar methods MULTIMOORA does not need normalization, being based on dimensionless measures. Importance of an objective can eventually be given by the stakeholders concerned. MULTIMOORA is composed of three approaches: Ratio System, Reference Point and Multiplicative Form Methods, all the three of the same importance and each controlling each other. Twenty two objectives, 10 originating from statistics and 12 from statistics and forecasts, important for the future, characterize the 27 EU-Countries economies. A Dominance Theory, summarizing the three obtained ordinal numbers per country ranks the 27 European Union Countries concerning these countries credit rating into three CORE categories. If Standard & Poor’s Credit Rating System is compared to this CORE method no many differences arise. Only CORE is the work of maximum four par time researchers against the 10,000 employees of Standard & Poor’s worldwide. In addition Standard & Poor’s is an example of qualitative judgment against the quantitative research of CORE. As the classifications of Moody’s and Fitch are very similar to this one of Standard & Poor’s the outcome would be the same for these other Credit Rating Agencies.

KEYWORDS: multi-objective optimization, European Union, ratio system, reference point method, full multiplicative form, MULTIMOORA.

JEL classification: C44; E61; F59; M2; O22.