Global inefficiencies in labour, patents, energy, capital, environment, and economics: The role of corruption, democracy, and income distribution

This study investigates inefficiencies at the country level from 2013 to 2021, analysing physical capital, energy, labour, patent, GDP, and CO2 inefficiencies using a Data Envelopment Analysis (DEA) framework. Our study introduces a sub-reference set, analogous to congestion technology, showing that increasing labour input can potentially enhance outputs, a feature absent in traditional models with strong input disposability. This methodological innovation addresses the implications of expanding labour inputs, crucial for national policy considerations. Key findings reveal that labour inefficiency is the primary source of inefficiency globally, while patent inefficiency is most prevalent in Latin America, the Caribbean, and middle-income countries. Regional inefficiencies are relatively similar, with the exception of energy, where high-income countries outperform in all evaluated areas. Our second-stage analysis shows that: 1) democracy increases patent inefficiency but reduces GDP inefficiency; 2) the top 1 % income share increases patent inefficiency; 3) control of corruption reduces patent inefficiency but increases GDP inefficiency; and 4) lower levels of corruption, as indicated by the Corruption Perceptions Index, lead to improvements in GDP efficiency.