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An Improved Inverse DEA for Assessing Economic Growth and Environmental Sustainability in OPEC Member Nations

Author

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  • Kelvin K. Orisaremi

    (Department of Industrial and Systems Engineering, Faculty of Engineering, The Hong Kong Polytechnic University, Hung Hom, Hong Kong)

  • Felix T. S. Chan

    (Department of Decision Sciences, Macau University of Science and Technology, Avenida Wai Long, Taipa, Macau)

  • Xiaowen Fu

    (Department of Industrial and Systems Engineering, Faculty of Engineering, The Hong Kong Polytechnic University, Hung Hom, Hong Kong)

Abstract

Economic growth is essential for nations endowed with natural resources as it reflects how well those resources are utilized in an efficient and sustainable way. For instance, OPEC member nations, which hold a large proportion of the world’s oil and gas reserves, may require a frequent evaluation of economic growth patterns to ensure that the natural resources are best used. For this purpose, this study proposes an inverse data envelopment analysis model for assessing the optimal increase in input resources required for economic growth among OPEC member nations. In this context, economic growth is reflected in the GDP per capita, taking into account possible environmental degradation. Such a model is applied to the selected OPEC member nations, which suggests that in terms of increasing the GDP per capita, only one member was able to achieve the best efficiency (i.e., reaching the efficiency frontier), resulting in a hierarchy or dominance within the sample countries. The analysis results further identify the economic growth potential for each member country. For the case of Indonesia, the analysis suggests that further economic growth may be achieved for Indonesia without additional input resources. This calls for diversification of the nation’s economy or investment in other input resources. In addition, the overall results indicated that each member nation could increase its GDP per capita while experiencing minimal environmental degradation. Our analysis not only benchmarks the growth efficiency of countries, but also identifies opportunities for more efficient and sustainable growth.

Suggested Citation

  • Kelvin K. Orisaremi & Felix T. S. Chan & Xiaowen Fu, 2023. "An Improved Inverse DEA for Assessing Economic Growth and Environmental Sustainability in OPEC Member Nations," Mathematics, MDPI, vol. 11(23), pages 1-19, December.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:23:p:4861-:d:1293460
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    References listed on IDEAS

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    1. Emrouznejad, Ali & Anouze, Abdel Latef & Thanassoulis, Emmanuel, 2010. "A semi-oriented radial measure for measuring the efficiency of decision making units with negative data, using DEA," European Journal of Operational Research, Elsevier, vol. 200(1), pages 297-304, January.
    2. William W. Cooper & Lawrence M. Seiford & Joe Zhu (ed.), 2011. "Handbook on Data Envelopment Analysis," International Series in Operations Research and Management Science, Springer, number 978-1-4419-6151-8.
    3. Ismaila Rimi Abubakar, 2022. "Multidimensional Poverty among Nigerian Households: Sustainable Development Implications," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(2), pages 993-1014, November.
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