IDEAS home Printed from https://ideas.repec.org/a/ecr/col070/48585.html
   My bibliography  Save this article

Economic complexity and human development: comparing standard and slack-based data envelopment analysis models

Author

Listed:
  • Ferraz, Diogo
  • Moralles, Herick Fernando
  • Costa, Naijela Silveira da
  • Nascimento, Daisy do

Abstract

Several studies have argued economic complexity is an alternative way to understand well-being. There is a growing literature using standard data envelopment analysis (DEA), but we did not find studies comparing them with more advanced models, such as slack-based measure (SBM), or considering economic sophistication as an input in human development. To fill the gap, this article aims to compare standard models with SBM DEA models as tools for measuring countries’ efficiency in converting economic complexity into human development. We developed the Composite Index of Human Development and Economic Complexity (CIHD-EC) and used it to analyse 50 countries with data from 2013, finding that the standard models overestimated countries’ efficiency, especially that of developed and prosperous countries. In contrast, the SBM model provides a better ranking. Lastly, the CIHD-EC shows that Singapore is the only economy in the world that is efficient at transforming economic complexity into human development.

Suggested Citation

  • Ferraz, Diogo & Moralles, Herick Fernando & Costa, Naijela Silveira da & Nascimento, Daisy do, 2022. "Economic complexity and human development: comparing standard and slack-based data envelopment analysis models," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    • Handle: RePEc:ecr:col070:48585
    as

    Download full text from publisher

    File URL: http://repositorio.cepal.org/handle/11362/48585
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sen, Amartya, 2001. "Development as Freedom," OUP Catalogue, Oxford University Press, number 9780192893307, Decembrie.
    2. P. Zhou & B. Ang & D. Zhou, 2010. "Weighting and Aggregation in Composite Indicator Construction: a Multiplicative Optimization Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 96(1), pages 169-181, March.
    3. Choi, Yongrok & Zhang, Ning & Zhou, P., 2012. "Efficiency and abatement costs of energy-related CO2 emissions in China: A slacks-based efficiency measure," Applied Energy, Elsevier, vol. 98(C), pages 198-208.
    4. Lidia Angulo-Meza & Marcos Lins, 2002. "Review of Methods for Increasing Discrimination in Data Envelopment Analysis," Annals of Operations Research, Springer, vol. 116(1), pages 225-242, October.
    5. Enzo Barberio Mariano & Daisy Aparecida do Nascimento Rebelatto, 2014. "Transformation of wealth produced into quality of life: analysis of the social efficiency of nation-states with the DEA’s triple index approach," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 65(11), pages 1664-1681, November.
    6. Aguilar-Barceló, José G. & Higuera-Cota, Fernanda, 2019. "Challenges in innovation management for Latin America and the Caribbean: an efficiency analysis," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    7. Esteban-Pretel, Julen & Sawada, Yasuyuki, 2014. "On the role of policy interventions in structural change and economic development: The case of postwar Japan," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 67-83.
    8. repec:bla:afrdev:v:29:y:2017:i:s1:p:27-41 is not listed on IDEAS
    9. Mustafa, Ghulam & Rizov, Marian & Kernohan, David, 2017. "Growth, human development, and trade: The Asian experience," Economic Modelling, Elsevier, vol. 61(C), pages 93-101.
    10. -, 2019. "CEPAL Review no. 127," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    11. Juan Martín & Cira Mendoza, 2013. "A DEA Approach to Measure the Quality-of-Life in the Municipalities of the Canary Islands," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(1), pages 335-353, August.
    12. Noelia Somarriba & Bernardo Pena, 2009. "Synthetic Indicators of Quality of Life in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 94(1), pages 115-133, October.
    13. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    14. Edward Barbier & John Bugas, 2014. "Structural change, marginal land and economic development in Latin America and the Caribbean," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 23(1), pages 1-29, December.
    15. Joe Zhu, 2014. "Data Envelopment Analysis," International Series in Operations Research & Management Science, in: Quantitative Models for Performance Evaluation and Benchmarking, edition 3, chapter 1, pages 1-9, Springer.
    16. Ferrarini, Benno & Scaramozzino, Pasquale, 2016. "Production complexity, adaptability and economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 52-61.
    17. Pilar Murias & Fidel Martinez & Carlos Miguel, 2006. "An Economic Wellbeing Index for the Spanish Provinces: A Data Envelopment Analysis Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 77(3), pages 395-417, July.
    18. Waelbroeck, Patrick, 2003. "Innovations, production complexity and the optimality of R&D," Economics Letters, Elsevier, vol. 79(2), pages 277-282, May.
    19. Saviotti, Pier Paolo & Pyka, Andreas, 2013. "From necessities to imaginary worlds: Structural change, product quality and economic development," Technological Forecasting and Social Change, Elsevier, vol. 80(8), pages 1499-1512.
    20. Paula Bustos & Bruno Caprettini & Jacopo Ponticelli, 2016. "Agricultural Productivity and Structural Transformation: Evidence from Brazil," American Economic Review, American Economic Association, vol. 106(6), pages 1320-1365, June.
    21. Mauro Caminati, 2006. "Knowledge growth, complexity and the returns to R&D," Journal of Evolutionary Economics, Springer, vol. 16(3), pages 207-229, August.
    22. Gala, Paulo & Camargo, Jhean Steffan Martines de & Freitas, Elton, 2017. "The Economic Commission for Latin America (ECLA) was right: scale-free complex networks and core-periphery patterns in world trade," Textos para discussão 449, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    23. Antonelli, Cristiano, 2016. "Technological congruence and the economic complexity of technological change," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 15-24.
    24. Amsden, Alice H. & Tschang, F. Ted, 2003. "A new approach to assessing the technological complexity of different categories of R&D (with examples from Singapore)," Research Policy, Elsevier, vol. 32(4), pages 553-572, April.
    25. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
    26. Guerrero C., Alejandro & Rivera T., César, 2009. "Mexico: total productivity changes at the principal container ports," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    27. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2006. "Introduction to Data Envelopment Analysis and Its Uses," Springer Books, Springer, number 978-0-387-29122-2, November.
    28. D K Despotis, 2005. "A reassessment of the human development index via data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(8), pages 969-980, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ferraz, Diogo & Moralles, Hérick Fernando & Suarez Campoli, Jéssica & Ribeiro de Oliveira, Fabíola Cristina & do Nascimento Rebelatto, Daisy Aparecida, 2018. "Economic Complexity and Human Development: DEA performance measurement in Asia and Latin America," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 25(4), pages 839-853.
    2. Diogo Ferraz & Enzo B. Mariano & Daisy Rebelatto & Dominik Hartmann, 2020. "Linking Human Development and the Financial Responsibility of Regions: Combined Index Proposals Using Methods from Data Envelopment Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(2), pages 439-478, July.
    3. Mariano, Enzo Barberio & Sobreiro, Vinicius Amorim & Rebelatto, Daisy Aparecida do Nascimento, 2015. "Human development and data envelopment analysis: A structured literature review," Omega, Elsevier, vol. 54(C), pages 33-49.
    4. Salvatore Greco & Alessio Ishizaka & Menelaos Tasiou & Gianpiero Torrisi, 2019. "On the Methodological Framework of Composite Indices: A Review of the Issues of Weighting, Aggregation, and Robustness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 61-94, January.
    5. Vincenzo Patrizii & Anna Pettini & Giuliano Resce, 2017. "The Cost of Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(3), pages 985-1010, September.
    6. Victoria Wojcik & Harald Dyckhoff & Marcel Clermont, 2019. "Is data envelopment analysis a suitable tool for performance measurement and benchmarking in non-production contexts?," Business Research, Springer;German Academic Association for Business Research, vol. 12(2), pages 559-595, December.
    7. Anna Łozowicka & Bartłomiej Lach, 2022. "CI-DEA: A Way to Improve the Discriminatory Power of DEA—Using the Example of the Efficiency Assessment of the Digitalization in the Life of the Generation 50+," Sustainability, MDPI, vol. 14(6), pages 1-22, March.
    8. Enzo Barberio Mariano & Diogo Ferraz & Simone Cristina Oliveira Gobbo, 2021. "The Human Development Index with Multiple Data Envelopment Analysis Approaches: A Comparative Evaluation Using Social Network Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 157(2), pages 443-500, September.
    9. José Sobreiro Filho & Enzo Barberio Mariano & Vinicius Amorim Sobreiro & Charbel José Chiappetta Jabbour, 2016. "Beyond the Agrarian Reform Policies in Brazil: An Empirical Study of Brazilian States from 1995 Through 2011," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(3), pages 1093-1114, December.
    10. Jorge Guardiola & Andrés J. Picazo-Tadeo, 2013. "Weighting life domains with Data Envelopment Analysis," Working Papers 1311, Department of Applied Economics II, Universidad de Valencia.
    11. Annalina Sarra & Eugenia Nissi, 2020. "A Spatial Composite Indicator for Human and Ecosystem Well-Being in the Italian Urban Areas," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 148(2), pages 353-377, April.
    12. Ferraz, Diogo & Moralles, Herick Fernando & Campoli, Jéssica & do Nascimento Rebelatto, Daisy Aparecida, 2017. "Economic Complexity and Quality of Life in Latin America and Asia between 2010 and 2014," EconStor Conference Papers 171459, ZBW - Leibniz Information Centre for Economics.
    13. Zhou, Haibo & Yang, Yi & Chen, Yao & Zhu, Joe, 2018. "Data envelopment analysis application in sustainability: The origins, development and future directions," European Journal of Operational Research, Elsevier, vol. 264(1), pages 1-16.
    14. OA Carboni & P. Russu, 2014. "Measuring Environmental and Economic Efficiency in Italy: an Application of the Malmquist-DEA and Grey Forecasting Model," Working Paper CRENoS 201401, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    15. Shih-Heng Yu, 2019. "Benchmarking and Performance Evaluation Towards the Sustainable Development of Regions in Taiwan: A Minimum Distance-Based Measure with Undesirable Outputs in Additive DEA," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1323-1348, August.
    16. Ernest Reig, 2012. "Building an Enlarged Human Development Indicator: Europe and the Southern Mediterranean Basin," Working Papers 1203, Department of Applied Economics II, Universidad de Valencia.
    17. Nicky Rogge & Ilse Nijverseel, 2019. "Quality of Life in the European Union: A Multidimensional Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 765-789, January.
    18. Ernest Reig-Martínez, 2013. "Social and Economic Wellbeing in Europe and the Mediterranean Basin: Building an Enlarged Human Development Indicator," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(2), pages 527-547, April.
    19. Gobbo, Simone Cristina de Oliveira & Mariano, Enzo Barberio & Gobbo Jr., José Alcides, 2021. "Combining social network and data envelopment analysis: A proposal for a Selection Employment Contracts Effectiveness index in healthcare network applications," Omega, Elsevier, vol. 103(C).
    20. Avkiran, Necmi Kemal, 2015. "An illustration of dynamic network DEA in commercial banking including robustness tests," Omega, Elsevier, vol. 55(C), pages 141-150.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecr:col070:48585. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Biblioteca CEPAL (email available below). General contact details of provider: https://edirc.repec.org/data/eclaccl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.