Efficiency and productivity analysis of innovation, human capital, environmental, and economic sustainability nexus: case of MENA countries.

Abstract

Innovation, human capital, economic, and environmental nexus is essential in sustainable development. The Middle East and North Africa (MENA) is an emerging market with the potential to transcend the dilemma of attaining economic and environmental sustainability. Data envelopment analysis through the Malmquist-Luenberger productivity index is utilized to estimate MENA country's innovation, human capital, economic, and economic sustainability efficiency and productivity. Results indicate an upward trend in efficiency, with a 26% increase in average efficiency between 2017 and 2019 compared to 2011 and 2016. However, there is variation in efficiency between countries. The decomposition of the productivity index into technical change and technological change indicates that the efficiency growth in 2017-2019 could be attributed to technical improvement than technological increase. However, there is a shift to more technological progress than technical increase. Study shows that developing human capital and capacity is as integral to sustainable development as innovation advancement. Strategies to simultaneously augment human capital and innovation towards sustainable development are presented.