A Measurement Framework for Knowledge-Based Economy (KBE) Efficiency in ASEAN: A Data Envelopment (DEA) Window Approach

The objective of this paper is to assess the relative efficiencies of ASEAN-5 countries in their development ofknowledge-based economies (KBEs) during the period 2005-2010. The KBE concept was first used by theOrganization for Economic Co-operation and Development (OECD) describing it as an economy which isdirectly based on the production, distribution and use of knowledge and information. Subsequently, the AsiaPacific Economic Cooperation forum (APEC) and the World Bank Institute (WBI), along with the OECD,extended the concept and developed frameworks to compare the status of the knowledge base of differenteconomies. These frameworks identify four core dimensions: knowledge acquisition, production, distributionand utilization, and use many structural and qualitative variables in their analysis. But none of the currentmethodologies explicitly divide the KBE indicators under these four core dimensions or measure the efficiencywith which knowledge inputs are transformed to knowledge outputs. This paper attempts to fill the gap inexisting literature by building a policy-focused KBE framework, selecting appropriate indicators from theexisting OECD and WBI KBE frameworks and assessing the relative input-output efficiencies of the ASEAN-5countries in the development of their KBEs over time. For this purpose we use the linear programmingapplication of Data Envelopment (DEA) Window Analysis. The DEA/Window scores allow the comparison ofthe relative performance of each country regarding each dimension of KBE. The importance of this study,however, is not so much the immediate result which highlights comparative efficiencies, but rather thatDEA/Window is a workable model which can take the study of KBE further in investigating the contributoryfactors of KBE.