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Abstract
This paper examines which economic sectors produce the highest return relative to cost, a central but still unresolved question in development economics and macroeconomic policy. To address this, it introduces the Sectoral Economic Efficiency Index (SEEI), a multidimensional measure that combines benefits such as GDP growth, job creation, labor productivity, exports, and innovation against costs including capital requirements, public support, environmental burden, duration, and infrastructure needs. Building on SEEI, the paper develops the Sectoral Efficiency Frontier Theory (SEFT), which argues that the most efficient investment priorities are not fixed across countries, but depend on development stage, institutional capacity, and inter-sectoral linkages. It also proposes the Dynamic Cost-Benefit Productivity Index (DCBPI) to capture risk-adjusted productivity across short-, medium-, and long-term horizons. The analysis uses a balanced panel of 127 countries from 1995 to 2023, drawing on data from the World Bank, IMF, OECD, ILO, UNIDO, and WIPO. Using Fixed Effects, Random Effects, System GMM, Difference-in-Differences, and Quantile Regression models, the paper finds strong support for SEFT. ICT and advanced business services show the highest efficiency in high-income economies, while advanced manufacturing and industrial upgrading are more efficient in upper-middle-income economies. Infrastructure investment is consistently strong in the short run across all stages, while R&D, green energy, and human capital formation dominate in the long run, with DCBPI values roughly 2.4 to 3.1 times higher than short-run alternatives. These findings suggest a phased sectoral strategy for growth and offer practical guidance for industrial policy under fiscal constraints.
Supplementary materials
Title
Sectoral Economic Efficiency and National Growth: A Multi-Dimensional Framework for Structural Transformation Across Development Stages
Description
Comprehensively revised and strengthened the manuscript for publication-quality academic presentation while fully preserving the original theoretical framework, econometric structure, equations, statistical results, and empirical conclusions. Improved the abstract, introduction, literature review, methodological explanations, empirical discussion, policy analysis, and overall logical flow to align with the standards of leading economics working papers and international research institutions. Refined the presentation of SEEI, SEFT, and DCBPI to create a more coherent and analytically rigorous framework connected to structural transformation, productivity spillovers, and development-stage conditionality literature. Enhanced transitions, readability, econometric clarity, and academic tone while removing repetitive and mechanical phrasing. Added a professional Data Availability and Research Repository section covering dataset transparency, replication guidance, methodological reproducibility, variable construction, and recommended archival platforms including Harvard Dataverse, Zenodo, OSF, and GitHub. Also developed a structured companion panel dataset and replication-ready Excel workbook calibrated to reproduce the paper’s reported empirical results.
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Title
Supplementary Appendix: SEEI Weighting Methodology, Spillover Elasticity Estimation, Variable Definitions, and Data Sources
Description
This supplementary appendix provides the methodological and technical foundations underlying the construction and estimation of the Sectoral Economic Efficiency Index (SEEI). Appendix A presents the principal components analysis (PCA) methodology used to derive endogenous weights for the Benefit Composite Index (BCI) and Cost Composite Index (CCI), including standardization procedures, principal component loadings, explained variance, and spillover elasticity estimation based on OECD TiVA linkage data. Appendix B contains the full variable dictionary, definitions, data transformations, calibration methods, and primary international data sources used throughout the empirical analysis. Variables cover sectoral productivity, employment, exports, innovation, environmental costs, infrastructure requirements, institutional quality, financial development, and spillover intensities. Data sources include the World Bank, OECD, IMF, WIPO, UNCTAD, WTO, Penn World Tables, ILOSTAT, UNEP, and OECD-WTO TiVA databases. The appendix supports transparency, reproducibility, and methodological rigor in the study’s international panel analysis framework.
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Supplementary weblinks
Title
Replication Dataset and Supporting Materials for Sectoral Economic Efficiency and Economic Growth Across Development Stages
Description
This dataset contains the replication materials, constructed panel dataset, and supporting documentation for the study “Sectoral Economic Efficiency and Economic Growth Across Development Stages: Theory, Measurement, and International Panel Evidence” (2026). The research develops the Sectoral Economic Efficiency Index (SEEI), Sectoral Efficiency Frontier Theory (SEFT), and Dynamic Cost-Benefit Policy Index (DCBPI) to evaluate how sectors contribute to long-run growth relative to their economic, institutional, environmental, and fiscal costs.
The dataset covers 127 economies from 1995–2023 and includes 40,513 country-sector-year observations. Variables include sectoral productivity indicators, spillover multipliers, SEEI estimates, DCBPI projections, macroeconomic controls, institutional quality measures, and development-stage classifications. Supporting files document variable definitions, PCA weighting procedures, estimation methods, robustness checks, and dataset construction steps to support transparency, reproducibility, and future research.
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