Energy efficiency, productive performance and heterogeneous competitiveness regimes. Does the dichotomy matter?

Highlights: • We explore the relationship between measures of performance. • We create heterogeneous competitiveness regimes by partitioning the metafrontier. • We use a fractional probit model with one endogenous regressor. • Energy efficiency & productive performance are detached in competitive economies. • We find that dichotomy matters, especially for policy design. -- Abstract: We investigate the links between energy efficiency and productive performance by relaxing the technological isolation assumption among country economies at a global scale. More precisely, we partition the universal technology giving rise to heterogeneous competitiveness regimes to investigate the relationship between energy efficiency, productive performance and spillover effects by adopting a metafrontier framework. Considering seventy seven countries from 2002 through 2011, we employ data on the global competitiveness index to cluster the examined countries into two technological groups, the competitive and less competitive one. The performance of the country economies is evaluated using the Data Envelopment Analysis and the corresponding slack-based energy efficiency scores. Endogeneity between measures of performance stimulates the use of a control function approach employing fractional probit models with endogenous regressor. Although there is not enough evidence to justify the endogenous relationship between the energy efficiency and productive performance, results indicate that the two performance measures appear to be detached, for the competitive cluster. We find that dichotomy matters, as the less competitive country economies capitalize spillover effects to improve energy efficiency, but this is not the case for the countries clustered in the competitive group. In addition, a U-shaped relationship between energy efficiency and productive performance is documented, highlighting that performance measures are intrinsically linked.