Re-examining sustainable development in Europe: A data envelopment approach

Abstract

Sustainable development is a widely known concept in public and academic circles and in macroeconomic policy. This study applies data envelopment analysis to 37 European countries for the period 2004-2016 in order to evaluate sustainable development objectively. The model uses gross domestic product per capita as desirable output, CO2 emissions and Gini Index as undesirable outputs and three input variables: Unemployment rate, fixed capital formation and energy consumption. Thus, all three pillars of sustainable development are included in the analysis. This is the first comprehensive analysis of European countries carried out with this methodology. Several model specifications are observed, in order to check for robustness of results. The results indicate that countries which are already highly ranked by existing world indices are ranked similarly in the empirical results of this research. Moreover, the most inefficient countries have shown an increase in sustainable development efficiency score over the observed period.