Natural resources utilization efficiency evaluation, determinant of productivity change, and production technology heterogeneity across developed and developing G20 economies

Abstract

Efficiently utilizing natural resources (NRs) and enhancing their productivity growth are crucial factors for sustainable economic growth in major global economies. Further production technologies heterogeneity among developed and developed G20 countries is vital to natural resource utilization efficiency (NRUE). To this end, the estimation of NRUE, natural resources total factor productivity, and technological gap ratio (TGR) is worth investigating. This study employed Data Envelopment Analysis (DEA) Super-SBM, Meta-frontier analysis, and the Malmquist productivity index to evaluate NRUE, TGR, and productivity changes among G20 countries from 1995 to 2020. The average Natural Resource utilization Efficiency (NRUE) among G20 countries is 0.7071, indicating an improvement potential of around 29.29% in natural resource conversion. Developed G20 economies have a natural resource utilization efficiency (NRUE) of 0.9528, higher than that of the NRUE (0.506) of developing G20 countries. Developed countries have a TGR of 0.9962, which is significantly higher than the TGR of developing countries at 0.6746, indicating a significant gap in production technology. Total factor productivity growth of 0.8 % was witnessed in developed countries while developing countries demonstrated a decline of 0.6 percent in Total Factor Productivity Change (TFPC) over the study period. Analyzing the decomposition of TFPC reveals technological change as the predominant factor influencing productivity change in G20 economies instead of efficiency changes. A Mann-Whitney U test has proved the existence of significant statistical differences in average NRUE, TGR, and technological change (TC) levels between developed and developing G20 countries.