Exploring Feedback Loops between Performance Measures. Energy and Environmental Efficiency under heterogeneous Eco-Innovation groups

By following a two-stage analysis, we explore whether resource efficiency measures are interconnected through feedback loops under heterogeneous eco-innovation regimes. In the first stage we adopt the bootstrap Data Envelopment Analysis and a Directional Distance Function approach to estimate productive performance, energy and environmental efficiency of each country under a metafrontier total factor productivity framework accounting for technological heterogeneity and input complementarities. In the second, we employ the potential of the identification through heteroskedasticity estimator to tackle endogeneity concerns surrounding performance measures, we seek the drivers of resource efficiency measures. We comprise a unique balanced panel for the EU-28 from 2010 through 2014 including the eco-innovation index and hand-collected data on the global competitiveness index. Findings indicate that resource efficiency measures despite those are interconnected through feedback loops, they act either as closely related measures i.e. blood brothers or as loosely related ones i.e. distant relatives. This is particularly relevant for policy design. In this line, findings indicate that there is not a one-size-fits-all policy as the eco-innovation group each country belongs to should be considered as well since the latter respond in an asymmetric manner to candidate drivers.