Fuzzy ANP and DEA approaches for analyzing the human development and competitiveness relation

Abstract

Human development and competitiveness have a causal relation. However, the literature is not clear on which one affects the other. This study investigates the bilateral relation between human development and competitiveness. For this purpose, initially, Fuzzy Analytic Network Process (FANP) is utilized to develop a composite index based on the relative importance weights of respective human development and competitiveness drivers. By FANP, the effects of key dimensions of human development and indexes of competitiveness on each other are taken into account. Subsequently, countries' efficiencies on converting their human development to competitiveness and inversely, competitiveness to human development is measured by Data Envelopment Analysis (DEA). Two different DEA models are developed to consider the bilateral relations. 45 countries are evaluated using both FANP and DEA models. Finally, the results are synthesized to reveal the direction of the relationship. It is found that the effect of competitiveness on human development is more significant than the effect of human development on competitiveness.