The Ef ciency Evaluation of ASEAN Countries Prior to the Economic Integration: The Application of Undesirable Output Data Envelopment Analysis

Abstract

The objectives of this paper aim to assess the efficiency level of the member countries of ASEAN before
completely integrating into the ASEAN Economic Community in 2015. The researcher applied the evaluation
technique called Data Envelopment Analysis (DEA) with the presence of the undesirable output variable in
computation of the efficiency score. The results showed that under the general bad output model, most
countries operating on the efficiency frontier were the small countries which were the members of AEC
including Lao, Singapore, and Brunei with the technical efficiency score of 1 both under the assumption of
CRS and VRS. Besides, the factor that had a significant impact on the efficiency score is the problem of
country’s corruption. Moreover, the results of the non separable model showed that under the assumption of
CRS and VRS the countries operating on the efficiency frontier were Singapore, Brunei, Philippines, Vietnam
Cambodia, Lao, Myanmar and Indonesia. Besides, the sources of inefficiency of the rest countries (Malaysia
and Thailand) came from the output side. The main source of inefficiency came from the excess of the
carbon dioxide emission from the country’s consumption of energy and the inefficiency of arable land use.