Energy and CO2 emissions as the determinants of countries' productivity with different levels of economic development

Abstract

In the present study, Data Envelopment Analysis (DEA) is used for the period spanning from 1980 to 2012 and for a total of 32 countries which are classified into four groups, according to their level of development (Developing, BRICS, Developed, G7). DEA allows us to measure technical efficiency under constant and variable returns to scale and also the Malmquist index and its components. Furthermore, we develop an order-a approach for the determination of partial frontiers. An output oriented model is applied. Labour and capital are used as inputs while the GDP index is used as output. Subsequently, energy is incorporated in the model as an additional input and CO2 emissions as undesirable output. A comparison of productivity indices, allows us to highlight the different levels of productivity, before and after the integration of energy and CO2 emissions as additional variables, for each group of countries and therefore their sustainability gaps. © Copyright 2017 Inderscience Enterprises Ltd.