Economic complexity and human development: comparison of standard and slack-based data envelopment analysis models

Several studies advocate economic sophistication as an alternative way of understanding well-being. More and more work is based on standard Data Envelopment Analysis (DEA), but no studies were found that compare it with more advanced models or that consider economic sophistication as an input of human development. The objective is to fill this gap by comparing standard DEA and SBM models as tools to measure the efficiency of countries in converting economic sophistication into human development. The Composite Human Development and Economic Complexity Index (CHDI-ECI) was developed and applied to 50 countries with 2013 data, and it was concluded that standard models overestimate the efficiency of countries, especially the most developed and prosperous ones. In contrast, SBM models provide a better ranking. Finally, the EC-HDI shows that Singapore is the only economy that efficiently transforms economic complexity into human development.