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

Po-Chi Chen, Ming-Miin Yu (), Ching-Cheng Chang, Shih-Hsun Hsu and Shunsuke Managi
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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

International Journal of Information Technology & Decision Making (IJITDM), 2015, vol. 14, issue 03, 481-520

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.

Keywords: Data envelopment analysis; directional distance function; undesirable output; Russell measure; slacks-based model (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (7)

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DOI: 10.1142/S0219622015500091

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