A Measurement Framework for Knowledge-Based Economy (KBE) Efficiency in ASEAN: A Data Envelopment (DEA) Window Approach

Abstract

The objective of this paper is to assess the relative efficiencies of ASEAN-5 countries in their development of knowledge-based economies (KBEs) during the period 2005-2010. The KBE concept was first used by the Organization for Economic Cooperation and Development (OECD) describing it as an economy which is directly based on the production, distribution and use of knowledge and information. Subsequently, the Asia Pacific Economic Cooperation forum (APEC) and the World Bank Institute (WBI), along with the OECD, extended the concept and developed frameworks to compare the status of the knowledge base of different economies. These frameworks identify four core dimensions: knowledge acquisition, production, distribution and utilization, and use many structural and qualitative variables in their analysis. But none of the current methodologies explicitly divide the KBE indicators under these four core dimensions or measure the efficiency with which knowledge inputs are transformed to knowledge outputs. This paper attempts to fill the gap in existing literature by building a policy-focused KBE framework, selecting appropriate indicators from the existing OECD and WBI KBE frameworks and assessing the relative input-output efficiencies of the ASEAN-5 countries in the development of their KBEs over time. For this purpose we use the linear programming application of Data Envelopment (DEA) Window Analysis. The DEA/Window scores allow the comparison of the relative performance of each country regarding each dimension of KBE. The importance of this study, however, is not so much the immediate result which highlights comparative efficiencies, but rather that DEA/Window is a workable model which can take the study of KBE further in investigating the contributory factors of KBE.