Assessment of relative efficiency of countries in attaining human development sub indexes

Abstract

Competitiveness and human development are two major aspects of nations' performance. However, the main objective of competitiveness should be to improve human development. In the current study, we aimed to examine the relative efficiency of countries in achieving the aforementioned target. In other words, the question is whether competitiveness has led to human development. To this end, we selected 31 countries with the same category in human development (high human development) and also with available data on competitiveness and its components. Due to the nature of the study, we used Data Envelopment Analysis (DEA) method. The model used in this study employed three subindexes of global competitiveness including basic requirements, efficiency enhancers, and innovation and sophistication factors as input variables and three subindexes of human development including life expectancy at birth, mean years of schooling, and per capita national income as output variables. Since, as noted, the goal of countries (DMUs) is to improve human development; this study employed an output-oriented DEA model. Though, a DEA model with either constant or variable return to scale could be used, this paper employs DEA with constant return to scale because variable case has extended to accommodate scale effects while in our case (where countries in the role of units under assessment are large enough) intrinsic scale effects do not exist and also CRS models have higher separable power for differentiating efficient and inefficient units. And finally after running the model we found that 9 out of 31 assessed countries are technically efficient which implies that these 9 countries have used competitiveness subindexes to attain expected values of human development sub-indexes. In 2012 Iran is an inefficient unit, having a technical efficiency rank of 19th among the assessed countries. As in this paper there are two kinds of variables, i.e. input and output variables, the most effective subindex which have lowered Iran's rank are life expectancy at birth for input variables and efficiency enhancers for output variables. Moreover, Albania and Venezuela have been introduced as reference set for Iran in this year.