Measuring and ranking of economic, environmental and social efficiency of countries

Purpose - The purpose of this paper is to measure and rank nation-states' governance effectiveness and quality on a quantifying scientific basis, by means of data envelopment analysis. Design/methodology/approach - The principles are first analyzed from a theoretical and normative standpoint, linking to earlier literature. One dimension of the approach is adding the equality in income distribution as an output. Another dimension boils down to environmental performance. Findings - The addition of the Gini index affects the ranking of the developing countries in a more significant manner. Similar results are obtained when the authors add the environmental performance as an input. Another interesting result suggests that conventional ranking methods (i.e gross domestic product per capita or human development index) could be used for representing the country's efficiency only for developed countries. Research limitations/implications - Future research may be aimed at applying the developed methodology to more countries, both developed and developing, as well as considering inclusion of additional ranking parameters. Practical implications - The obtained procedure may be regarded as a comprehensive, holistic, mostly objective, and quantifiable method of ranking countries according to their governmental performance accomplishments. The addition of the Gini index and the environmental performance influences the ranking and is a significant improvement as compared to contemporary procedures. Originality/value - The innovation in this paper is that the authors suggest to measure efficiency of countries not only by their income, but also, looking on wider aspects of efficiency as equity and environmental performance.