Undesirable output in efficiency and productivity: Example of the G20 countries

ABSTRACT

This article selects G20 countries during the period 1991 to 2007 and uses Seiford and Zhu’s (2002) data envelopment analysis and Malmquist Index to calculate and analyze these 19 countries’ productivity efficiency based on fossil-fuel CO₂ emissions, studying the effects of the undesirable output to productivity efficiency ranking. The input variables are industry and population. The output variances are gross domestic product and the amount of fossil-fuel CO₂ emissions from 1991 to 2007. The undesirable output is fossil-fuel CO₂ emissions.

The result shows that in order to reduce CO₂ emissions after the Kyoto Protocol, some countries have spent a lot of effort but with results lower in productivity than before. Only the U.S. can offer the best productivity, but is unaffected by CO₂ emissions.

KEYWORDS:

• CO₂ emission
• DEA
• efficiency
• Malmquist
• productivity
• undesirable output