An Innovation Perspective to Explore the Ecology and Social Welfare Efficiencies of Countries

Abstract

This study aims to measure the ability of 29 countries in producing competitive products and services that fulfill individual needs and improve the level of welfare with less utilization of natural resources. We build a two-stage network production process model to investigate the ecology efficiency and social welfare efficiency of the countries and then further discriminate the efficient countries in post-analysis. The two-stage network directional distance function is applied to assess the efficiencies of countries, and the network-based ranking approach is used to further discriminate the efficient countries following the panel data between the years 2013 and 2016. Results show that Poland and Spain are strongly referenced by other countries in the ecology stage, whereas Bulgaria, the United States, and Sweden are leaders in the social welfare stage. A remarkable observation is an absence of countries’ efficiency in both ecology and social welfare efficiencies. Most of the 29 countries have lower efficiency in the social welfare stage than in the ecology stage. This study suggests the strengths and highlights the weaknesses of the countries to help the governments efficiently improve and operate their countries.