Multi-Directional Productivity Change Index: Biennial Mea Malmquist Index

Abstract

The study extends MEA-Malmquist to handle LP infeasibilities and scale effect in infinite mixed period efficiency scores, develop a proposed productivity index (MEA Biennial Malmquist BMEAM), decompose the productivity index into Pure Technical Change, Pure Efficiency Change, Scale Technical Change and Scale Efficiency Change and empirically apply the proposed productivity index to determine the energy productivity change of African states. A quantitative research methodology that includes extending multi-directional productivity change (MEA Malmquist) to provide a comprehensive assessment of the energy sector of African states’ performance and identify patterns, trends, and factors influencing their development over the examined period. This study through MEA-Malmquist investigates the dynamic productivity of to 32 African states across the five sub-regions countries based on availability of data covering the periods from 2000 to 2019. In the first phase, the study develops and illustrates a proposed productivity index (MEA Biennial Malmquist-BMEAM) by formulating the MEA efficiency model, incorporating the variable specific efficiencies into Malmquist productivity index to measure productivity changes over time then solving the infeasibilities using a biennial frontier to include the two time periods. The results showed that after using the biennial frontier the infeasibilities in estimating productivity were resolved. The study further decomposed MEA Biennial Malmquist-BMEAM into 4 factors, the results revealed that the effect of managerial expertise as the main driver of the improvement observed in the industry. Also, the productivity change across the years shows that African energy industry, on average, experienced about 0.41% productivity improvement for capital services, 0.09% improvement productivity for labour, 0.02% decline for energy used.