Analyzing Economic Performance Using DEA and the Bootstrap Approach

The objective of this study is twofold. First, the author uses the Data Envelopment Analysis (DEA) to determine the technical efficiency of 42 African countries for the period 1992 to 2007. Second, the author evaluates the determinants of the technical efficiency index using the bootstrapped bias-corrected efficiency scores. The DEA analysis indicates that lower income economies in Africa have very low levels of efficiency and have low levels of energy use. On the other hand, upper-middle African income economies appear to be more efficient in using their resources than all other income groups. Bootstrap and truncated regression results show that improvements in governance, promotion of FDI, and information communication technologies are major drivers of technical efficiency. Therefore, a major focus of policies must be directed towards improving governance and increasing capital investment, including the adoption and deployment of modern technologies.