Network DEA efficiency in input-output models:: With an application to OECD countries

We undertake network efficiency analysis within an input-output model that allows us to assess potential technical efficiency gains by comparing technologies corresponding to different economies. Input-output tables represent a network where different sectoral nodes use primary inputs (endowments) to produce intermediate input and outputs (according to sectoral technologies), and satisfy final demand (preferences). Within the input-output framework it is possible to optimize primary inputs allocation, intermediate production and final demand production by way of non-parametric data envelopment analysis (DEA) techniques. DEA allows us to model the different subtechnologies corresponding to alternative production processes, to assess efficient resource allocation among them, and to determine potential output gains if inefficiencies were dealt with. The proposed model optimizes the underlying multi-stage technologies that the input-output system comprises identifying the best practice economies. The model is applied to a set of OECD countries. (c) 2006 Elsevier B.V. All rights reserved.