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Nonradial Directional Performance Measurement with Undesirable Outputs: An Application to OECD and Non-OECD Countries

Author

Listed:
  • Po-Chi Chen

    (Department of International Business, Chung Hua University, Hsinchu, Taiwan)

  • Ming-Miin Yu

    (Department of Transportation Science, National Taiwan Ocean University, 2 Pei-Ning Road, 20224, Keelung, Taiwan)

  • Ching-Cheng Chang

    (Institute of Economics, Academia Sinica, Taipei, Taiwan)

  • Shih-Hsun Hsu

    (Department of Agricultural Economics, National Taiwan University, Taipei, Taiwan)

  • Shunsuke Managi

    (Graduate School of Environmental Studies, Tohoku University, Sendai, Japan;
    Queensland University of Technology, Brisbane, Australia)

Abstract

The objective of this paper is to provide a more comprehensive efficiency measure to estimate the performance of OECD and non-OECD countries. A Russell directional distance function that appropriately credits the decision-making unit not only for increase in desirable outputs but also for the decrease of undesirable outputs is derived from the proposed weighted Russell directional distance model. The method was applied to a panel of 116 countries from 1992 to 2010. This framework also decomposes the comprehensive efficiency measure into individual input/output components' inefficiency scores that are useful for policy making. The results reveal that the OECD countries perform better than the non-OECD countries in overall, goods, labor and capital efficiencies, but worse in bad and energy efficiencies.

Suggested Citation

  • Po-Chi Chen & Ming-Miin Yu & Ching-Cheng Chang & Shih-Hsun Hsu & Shunsuke Managi, 2015. "Nonradial Directional Performance Measurement with Undesirable Outputs: An Application to OECD and Non-OECD Countries," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 14(03), pages 481-520.
    • Handle: RePEc:wsi:ijitdm:v:14:y:2015:i:03:n:s0219622015500091
    DOI: 10.1142/S0219622015500091
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    Citations

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    Cited by:

    1. Valadkhani, Abbas & Moradi-Motlagh, Amir, 2023. "An empirical analysis of exchange-traded funds in the US," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 995-1009.
    2. Carla Oliveira Henriques & Maria Elisabete Neves & Licínio Castelão & Duc Khuong Nguyen, 2022. "Assessing the performance of exchange traded funds in the energy sector: a hybrid DEA multiobjective linear programming approach," Annals of Operations Research, Springer, vol. 313(1), pages 341-366, June.
    3. Hidemichi Fujii & Shunsuke Managi & Roman Matousek & Aarti Rughoo, 2018. "Bank efficiency, productivity, and convergence in EU countries: a weighted Russell directional distance model," The European Journal of Finance, Taylor & Francis Journals, vol. 24(2), pages 135-156, January.
    4. Henriques, C.O. & Marcenaro-Gutierrez, O.D., 2021. "Efficiency of secondary schools in Portugal: A novel DEA hybrid approach," Socio-Economic Planning Sciences, Elsevier, vol. 74(C).
    5. Saleh, Ali Salman & Moradi-Motlagh, Amir & Zeitun, Rami, 2020. "What are the drivers of inefficiency in the Gulf Cooperation Council banking industry? A comparison between conventional and Islamic banks," Pacific-Basin Finance Journal, Elsevier, vol. 60(C).

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