Journal of Cleaner Production 295 (2021) 126505

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Political governance, corruption perceptions index, and national

dynamic energy efficiency
Wen-Min Lu a, Qian Long Kweh b, *, Mohammad Nourani c, Cheng-Yi Lin d
a
Department of International Business Administration, Chinese Culture University, No. 55, Hwa-Kang Road, Shilin District, Taipei, 11114, Taiwan
b
Faculty of Management, Canadian University Dubai, P.O. Box 117781, 1st Interchange, Sheikh Zayed Road, Dubai, United Arab Emirates
c
School of Management, Universiti Sains Malaysia, 11800, Penang, Malaysia
d
Department of Financial Management, National Defense University, No. 70, Sec. 2, Zhongyang North Rd., Beitou, Taipei, 112, Taiwan

a r t i c l e i n f o a b s t r a c t

Article history: This study estimates national dynamic energy efficiency of 49 countries for the period of 2007e2016 by
Received 10 October 2020 using a dynamic data envelopment analysis model and explores (i) the relationships between the CPI and
Received in revised form national dynamic energy efficiency, (ii) political governance and CPI, (iii) political governance and dy-
11 February 2021
namic energy efficiency, and (iv) the mediating role of the CPI on the association between political
Accepted 21 February 2021
Available online 25 February 2021
governance and national dynamic energy efficiency. Empirical results corroborate that European and
high-income countries perform better than their counterparts in national dynamic energy efficiency and
Handling editor. Mingzhou Jin the CPI, which has a positive effect on national dynamic energy efficiency. The proxies of political
governance, such as political stability, bureaucratic quality, personal safety and security of private
JEL classification: property, and legal and regulatory frameworks, also affect CPI and national dynamic energy efficiency,
D73 respectively. The CPI has a mediating effect on the relationship between political governance and na-
D24 tional dynamic energy efficiency. Overall, this study suggests that governments can promote probity
P16 policies to further improve national dynamic energy efficiency.
Keywords: © 2021 Elsevier Ltd. All rights reserved.
Corruption perceptions index
National dynamic energy efficiency
Data envelopment analysis
Political governance

1. Introduction
According to the United States Environmental Protection
Agency,1 carbon dioxide emissions have significantly increased
since 1900 worldwide due to fossil fuel combustion for heat and
electricity generation, industrial processes for economic growth,
and deforestation for agriculture and other land-use changes. It is
thus not surprising to see that researchers have explored energy
efficiency (for example, Hu and Wang, 2006; Stern, 2012; Zhang
et al., 2011). Examining factors of carbon dioxide emissions is
another important task as the consequence of carbon dioxide
emissions, viz. climate change, is threatening our ecosystems
(Sharma, 2011; Zhang et al., 2017). Among all, studies have docu-
mented the effect of corruption on environmental quality and
* Corresponding author.
E-mail addresses: wenmin.lu@gmail.com (W.-M. Lu), qlkweh@cud.ac.ae
(Q.L. Kweh), mohammad@nourani.net (M. Nourani), lcy6988@gmail.com (C.-Y. Lin).
1 ruption when coordination failures exist in the system) and argued
https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data.
economic growth (for example, Sharma and Mitra, 2019; Sinha
et al., 2019), and the role governance (for example, Aidt et al.,
2008; Dzhumashev, 2014). However, their results have been
inconclusive.
Intuitively, corruption dampens the productivity of capital by
different means, cripples the move of governments toward public
welfare, and encourages rent-seeking behaviors (Lambsdorff,
2002). For example, Mauro (1995) and Mo (2001) found that cor-
ruption dampens economic growth due to rent-seeking activities
(Aidt, 2016). However, given the existence of cumbersome eco-
nomic policies, economists support some degree of corruption as
the catalyzer for economic development (Bardhan, 1997;
Kalyuzhnova and Belitski, 2019; Swaleheen, 2006). That is, cor-
ruption may improve efficiency and ultimately economic growth.
To illustrate further, Chowdhury et al. (2015) found that corruption
plays a dual role as both sand and grease for international entre-
preneurship. Moreover, Kauper (2006) confirmed the existence of
good or bad corruption (e.g., entrepreneurs may benefit from cor-

https://doi.org/10.1016/j.jclepro.2021.126505
0959-6526/© 2021 Elsevier Ltd. All rights reserved.
W.-M. Lu, Q.L. Kweh, M. Nourani et al.
that economists ignore the possibility that inefficient institutions
may lead to inefficient capital markets (Chowdhury et al., 2015).
Taken together, the literature on the association between cor-
ruption and economic growth has found mixed evidence (Bardhan,
1997). More importantly, Aidt et al. (2008) observe that the nega-
tive effect of corruption on economic performance depends on
governance regimes. Corruption is negatively related to economic
growth in a high-quality governance regime, but this scenario is
rarely seen in a low-quality governance regime. Majority of the
studies on corruption and energy efficiency taken a growth indi-
cator, usually measured by GDP from energy consumption. How-
ever, if we hold the assumption that inefficiency is a major
phenomenon in an economy, then corruption can be linked to
capital inefficiency in a situation where the link between corrup-
tion and economic growth is not solid. This study assumes that
corruption is a primary source of capital inefficiency, thereby
deteriorating economic growth.
Therefore, different from prior studies (for example, Aidt et al.,
2008; Dzhumashev, 2014) that link governance and corruption to
economic growth, this study argues that incorporating corruption
as a mediating variable can better explain the inconclusive rela-
tionship. That is, political governance may have an effect on eco-
nomic growth through the mediating effect of corruption.
Specifically, using 49 countries worldwide as our sample, we
examine the relationships between the CPI and national dynamic
energy efficiency, political governance and CPI, political governance
and dynamic energy efficiency, and the mediating role of the CPI on
the association between political governance and national dynamic
energy efficiency.
This study differs from related studies in a number of ways. First,
in contrast to prior studies (Kauper, 2006; Mohamadi et al., 2017;
Salinas-Jime
nez and Salinas-Jime
nez, 2007), this study extends the
debate on energy efficiency (Hu and Wang, 2006; Stern, 2012;
Zhang et al., 2011) and applies the dynamic slack-based measure
(DSBM) model. This economy evaluation approach enables us to
estimate the relative country-level efficiencies in transforming re-
sources such as capital, labor force, and energy consumption into
outputs such as gross domestic product (GDP) and carbon dioxide
emissions. Moreover, we can separate the outputs into desirable
portion, viz. GDP, and undesirable portion, viz. carbon dioxide
emissions. The non-radial DSBM model proposed by Tone and
Tsutsui (2010) also considers the inadequacy of not only input
and output slacks, but also carry-over slacks, which address time
accumulation effect in the analysis. That is, using the DSBM model,
this study proposes a national dynamic energy efficiency after ac-
counting for the undesirable output of carbon dioxide emissions.
Overall, this study makes a few theoretical and practical con-
tributions. First, contrary to most of the literature, we use dynamic
energy efficiency as a measure of a country’s economic perfor-
mance. The DSBM model, which is one data envelopment analysis
(DEA) method (Charnes et al., 1978) allows us to consider a few
indicators simultaneously instead of relying on a single measure,
such as GDP or GDP growth as economic performance (Dyson et al.,
2001). It is important to note that DEA does not require the pre-
determination of parameters; the weights are defined using a
mathematical approach, which makes the analysis objective (Lu
et al., 2016).
Second, through the application of the DSBM model, the multi-
period efficiency evaluation provides us with a more reliable cross-
country comparison than do a window analysis (Klopp, 1985) and
the Malmquist index (Fa €re et al., 1994), which are used for esti-
mating the efficiency changes over time (Tone and Tsutsui, 2010;
Wanke et al., 2015). The DSBM model also measures long-term
dynamic energy efficiency more precisely by using carry-over
variables (Lu et al., 2014; Nourani et al., 2018). That is, by
2
Journal of Cleaner Production 295 (2021) 126505
considering the time effect and the number of carry-overs, the
DSBM model measures the efficiency of all countries in examina-
tion under the same frontier and conditions. Although the Malm-
quist index also considers time effect, it does not consider the
impact of the number of carry-overs. Moreover, the Malmquist
index compares two years of data each time, suggesting different
frontiers and thus different comparison benchmarks. Therefore,
considering the cross-country and multiperiod dataset used in this
study, we apply the DSBM model to better gauge national dynamic
energy efficiency.
Third, this study contributes to the literature by applying the
corruption perception index (CPI) developed by Transparency In-
ternational (TI) to proxy for corruption.2 The CPI is a quantified
perception of corruption in the public sector with ratings given by
country expert or businessperson, rendering it credible. Mean-
while, the proxies of political governance, including political sta-
bility, bureaucratic quality, and personal safety and security of
private property, are obtained from International Institute for
Management Development (IMD) (World Competitiveness Year-
book) as they are inclusive of estimating political governance. In
summary, this study pioneers carrying out a mediating role of
corruption perception index on dynamic national efficiency. The
findings can serve as a reference for improving lives in general,
including corruption decline and better dynamic energy efficiency
as a general, related work such as Helbing et al. (2015) would
suggest.
The rest of this paper is organized as follows: Section 2 discusses
the background related to corruption, political governance, and
economic performance; Section 3 describes the research frame-
works, the model, and the sample data used in this study; Section 4
discusses the findings; and Section 5 concludes the paper.
2. Literature review
2.1. Political governance and national dynamic energy efficiency
The theory of production of Cobb and Douglas (1928) puts for-
ward that increasing the input factors, labor and capital, will ulti-
mately raises the output quantities. The direct conclusion of the
theory is the improvement in economic efficiency deducts from the
increases in labor and capital. However, the level of economic ef-
ficiency is affected by other factors (Mankiw et al., 1992) including
institutional and governance factors. Political institutions are by far
one of the main reasons for variations in economic performance
(Shittu Waliu et al., 2020). Such statement is supported by the hi-
erarchy of institutions hypothesis (Acemoglu et al., 2005) where it
accentuates the dependency of economic institutions on political
institutions.
In line with the importance of political governance in stimu-
lating economic performance, current research highlights the
critical role of supportive government policies in energy efficiency
by means of reducing CO2 emission and energy saving in general
(Visscher et al., 2016). Langlois-Bertrand et al. (2015) proposed
classified the impediments of energy efficiency into three broad
categories, political obstruction, lack of policy coordination, and
conflicting guidelines in the governance structure. Delina (2012)
investigated the strategies in which coherent governance may
ensure maximum energy efficiency of institutions. Further,
exploring the governance capacities in the EU-28 economies,
Pereira and Da Silva (2017) found that political support, including
more robust governance monitoring and reporting system, is the
main concern to deliver an improvement in energy efficiency for
2
https://www.transparency.org/en/cpi/2020/index/nzl.
W.-M. Lu, Q.L. Kweh, M. Nourani et al.
member states. Similarly, quality governance found to be influential
on energy efficiency of the EU-28 economies during 1995e2014
(Apergis and Gar
cıa, 2019). Using a panel data of 23 OECD countries
over 1980 to 2013, Chang et al. (2015) found that government
ideology is an important factor of energy efficiency.
In a more recent global study, Yao et al. (2021) measure energy
efficiency using Super-SBM approach and found that political
regime has a major influence on energy efficiency. The authors
pointed that the political governance of a country, through tailoring
more favorable policies, is essential for improvement in energy
efficiency. More precisely, politically conservative nations are less
in favor of investment in energy-efficient technologies, thus, less
energy efficiency can be attained (Gromet et al., 2013). In this vein,
democratic countries are usually under pressure by their voters to
take considerable actions for the improvements in energy effi-
ciency (Yao et al., 2020). In summary, the extant literature on po-
litical governance and energy efficiency supports that political
situation of a country has a significant role for the improvement
energy efficiency. Therefore, we develop the following hypothesis:
Hypothesis 1. Political governance is related to national dynamic
energy efficiency.
2.2. Corruption and national dynamic energy efficiency
According to TI (Transparency International, 2018), the fight
against corruption in the world made little or no progress in 2017.
Among 180 countries ranked using a scale of 0 (highly corrupt) to
100 (very clean), more than two-thirds score below 50 with an
average score of 43, which is alarming in the current global civili-
zation. TI defines corruption as “the abuse of entrusted power for
private gain.” This definition points to agency problems as the
origin of all forms of political and economic corruption (Rose-
Ackerman and Palifka, 2016). Helbing et al. (2015) accentuated
that deterrence strategies are often not effective in impeding the
large-scale corruption, as a common crime activity, because the
actual system behavior is not captured in the conventional ap-
proaches and a complexity science may help in saving human lives.
Leff (1964) and Huntington (1968) argued that corruption can
increase economic performance by eliminating bureaucratic delays
or the bribery of hard-working employees. Their study opened
debates about the corruption performance nexus, and many studies
have investigated the relationship by using various approaches and
proxies. Lui (1985) established the efficiency-enhancing role of
corruption. By referring to the efficient grease hypothesis,
Kaufmann and Wei (1999) examined the theory that bribery leads
to low effective red tape and corroborated that companies paying
bribes spend considerable time on managerial negotiation, leading
to high capital costs. As opposed to Leff (1964) and Huntington
(1968), the majority concluded that corruption by any means cau-
ses inefficiency through the misuse of economic resources.
Wu et al. (2017) classified the corruption performance nexus
into three types. First, economists believe that corruption leads to
political and economic rent-seeking and capital inefficiency (cor-
ruption sand theory). Second, they believe that when a standard
system is lacking, such as in some developing or underdeveloped
countries, corruption improves efficiency by greasing the govern-
ment bureaucratic necessities. Third, they believe that corruption
plays the greasing and gridding effects. For instance, Aidt et al.
(2008) affirmed that the relationship between corruption and
growth relies on governance regimes; where high-quality political
institutions are present, corruption traces negative effects on
growth but not when low-quality institutions are present. Through
a survey conducted on Indian manufacturing firms, Sharma and
Mitra (2015) supported theories on the effects of bribes on firm
3
Journal of Cleaner Production 295 (2021) 126505
performance.
The effects of corruption on economic performance have
focused on any indicator leading to economic growth (Sharma and
Mitra, 2019), which prioritized growth indicators per se, such as
GDP, investment, and public expenditure. Cie
slik and Goczek (2018)
contended that corruption lowers investment and subsequently
pulls down economic growth. In a cross-country study,
Duerrenberger and Warning (2018) documented that corruption
caused the reduction of incentives in educational spending by
governments. Mo (2001) claimed that higher corruption by one
unit lessens the growth rate by 0.545 percentage points and that
political instability is the key factor by which corruption distresses
economic growth.
More studies supported similar findings. Farooq et al. (2013)
claimed that corruption impedes economic growth, and Kunieda
et al. (2014) and Saha and Ben Ali (2017) concluded that financial
openness and economic and political freedoms decrease the
negative effect of corruption on economic growth. Delgado et al.
(2014) found that corruption dampens the usefulness of foreign
direct investment (FDI) to improve economic growth, and
Dzhumashev (2014) highlighted the influence of optimal govern-
ment size in the relationship between corruption and economic
performance. Similarly, d’Agostino et al. (2016) discussed that
corruption has several negative effects on economic growth in
countries with high military spending. Pless and Fell (2017) argued
that electricity reliability depends on the level of corruption, and
such dependence will subsequently influence economic growth
and development.
Studies focusing on productivity and efficiency as measures for
economic performance have also been conducted. Applying the
Malmquist productivity indices, Salinas-Jime
nez and Salinas-
Jime
nez (2007) studied the relationship between CPI and produc-
tivity and elucidated that less corrupt economies, on average,
experience fast growth rates. Wu et al. (2017) suggested that
increased corruption levels can directly reduce regional total factor
productivity, and Faruq et al. (2013) applied DEA as a measure of
performance, without mentioning the model used, and confirmed
that poor bureaucratic quality and corruption decrease firm effi-
ciency. Halkos and Tzeremes (2010) found a U-shaped relationship
between corruption perception levels and economic efficiency
when using DEA window analysis, a measure of performance to
account for time-varying data. The traditional window analysis and
Malmquist index neglect the linking of activities and focus on
optimizing periodical efficiency separately while considering time
changes (Nourani et al., 2018). These linking activities are also
called carry-over activities, relating to the fact that some variables
are carried from one period to another (Tone and Tsutsui, 2010).
Compared with window analysis (Klopp, 1985) and the Malmquist
index (Fa€re et al., 1994), a dynamic DEA (DDEA) model considers
that a decision made in one period of time influences the suc-
ceeding periods. The model allows for a long-term dynamic process
by incorporating carry-over activities (Lu et al., 2014). In this study,
we take the initiative to employ a non-radial DDEA model, namely,
the DSBM model introduced by Tone and Tsutsui (2010), which
independently accounts for the inadequacy of inputs, outputs, and
carry-over activities.
The benefits of controlling corruption can also mean less
greenhouse gas emissions (Vasylieva et al., 2019). This upholds that
the improvement of national energy efficiency as the economic
performance of a nation can be achieved by means of lesser cor-
ruption (Fredriksson et al., 2004). The literature on corruption and
energy efficiency is rich, and a number of research has confirmed
the impeding effect of corruption on energy efficiency improve-
ment. However, majority of the studies on corruption and energy
efficiency considered GDP from energy consumption. For instance,
W.-M. Lu, Q.L. Kweh, M. Nourani et al.
Ozturk et al. (2019) showed that low corruption results in more
energy efficiency, estimated by a growth indicator, for all income
group economies. Sinha et al. (2019) found that public sector cor-
ruption has enhanced environmental degradation BRICS and Next
11 countries from 1990 to 2017.
There are a few studies that explored corruption and energy
efficiency nexus by measuring the latter using mathematical pro-
graming approach. Using a panel data of 30 provinces in China from
2005 to 2016, Hao et al. (2020) found that higher level of corruption
enhanced hindering effect of local area labor mismatch on green
total factor energy efficiency. In another study considering China as
a setting, Wang et al. (2020) confirmed that government corruption
directly reduced ecological efficiency and intensified resource
misallocation leading to further reduction of ecological efficiency.
The authors used dynamic panel data for the regression estimation,
however, they did not consider dynamic efficiency technique for
ecological efficiency calculation.
Lambsdorff (2003) argued that channels of influence exist
through which corruption affects economic performance. He
decomposed corruption into governance-related components,
including civil liberties, government stability, law and order, and
bureaucratic quality extracted from Gastil (1986) and the Interna-
tional Country Risk Guide. Governance-related components
received little attention from corruption-performance researchers
(Randrianarisoa et al., 2015). Corruption may have been derived
from different types of behavior, and the decomposition will help
find the sources of the greasing or gridding effects of corruption on
economic performance. This approach could answer why corrup-
tion leads to good economic growth in some scenarios. The present
study attempts to fill this gap.
The literature has explored the influence of countries’ gover-
nance on corruption and the consensus confirmed the positive
association. For example, Lee et al. (2020) found that the gover-
nance plays a significant role in innovative activity for corrupt
firms. Mohamadi et al. (2017) suggests that ideal governance must
efficiently maintain corruption under control. While the direct re-
lationships between political governance and corruption as well as
corruption and energy efficiency have been explored and
confirmed using different approaches, it is still not known whether
corruption can play a mediating role between political governance
and energy efficiency. Hence, this study attempts to propose a
comprehensive model considering political governance, corrup-
tion, and energy efficiency by considering a dynamic approach.
Taken together, we develop the following hypothesis:
Hypothesis 2. Corruption mediates the association between po-
litical governance and national dynamic energy efficiency.
3. Research design
3.1. Research framework
The regression analysis was divided into three parts. The first
part examined the effect of national CPI scores on their dynamic
energy efficiency, the second explored the association between
political governance variables and the CPI, and the third investi-
gated the effect of political governance variables on the dynamic
energy efficiency of countries. By identifying the associations
among the three components (i.e., CPI, political governance vari-
ables, and dynamic energy efficiency), political governance vari-
ables that can serve as alternative indicators to the CPI can be
identified alongside factors that affect dynamic energy efficiency to
improve government policies and promote overall national dy-
namic energy efficiency.
In the first part, variables such as secondary school enrolment
4
Journal of Cleaner Production 295 (2021) 126505
rate, raw material export value, and FDI were set as control vari-
ables to explore the correlation between CPI score and national
dynamic energy efficiency (Fig. 1).
Factors that affect dynamic energy efficiency vary because the
CPI is affected by many types of behaviors. In the second part, the
effects were identified by decomposing the CPI into the relevant
variables of political governance. Proxy variables for political
governance (i.e., political stability, bureaucratic quality, and per-
sonal safety and security of private property) enabled further
exploration of their relationships with the CPI (Fig. 2).
In the third part, associations between the governance variables
(i.e., political stability, bureaucracy, and personal safety and private
property security) and national dynamic energy efficiency were
explored. Secondary school enrolment rate was chosen as a control
variable to capture the proxy variables of the CPI and determine the
main factors affecting dynamic energy efficiency (Fig. 3).
3.2. Framework of dynamic energy efficiency assessment
The assessment of national dynamic energy efficiency was
divided into input and output. Capital, labor force, and energy
consumption were used as inputs, while GDP and carbon dioxide
emissions were used as desirable and undesirable outputs,
respectively. Capital, which exhibits an annual carry-over charac-
teristic, at the end of Period t was carried forward to Period t þ 1 to
measure the dynamic energy efficiency of Period t þ 1. Carry-over
was used to assess the annual operational performances of coun-
tries to obtain their long-term dynamic energy efficiency. The ef-
ficiency values were calculated after considering energy
consumption and environmental impact factors. Fig. 4 presents the
assessment framework.
3.2.1. Dynamic slack-based measure with undesirable outputs
Ignoring unintended by-products as a part of any economic
activity in a production process is inevitable. The issue of undesir-
€re et al.,
able outputs was discussed in the efficiency context (Fa
1986, 1989). The proposition was to impose Shephard (1970)
concept of weak disposability on the production possibility set. In
the current study, the authors proposed replacing the assumption
of strong disposability of undesirable outputs with being weakly
disposable while the desirable outputs remain strongly disposable.
Among the models developed to deal with environmentally
undesirable outputs, non-radial directional distance function (DDF)
(Chung et al., 1997; F€ are and Grosskopf, 2004) may provide a
reasonable efficiency measure (Zhou et al., 2008) because it
Fig. 1. CPI and national dynamic energy efficiency.
Note: This diagram depicts the association between CPI and national dynamic energy
efficiency. Secondary school enrollment rate, raw material export value, and foreign
direct investment are included as control variables in performing this association
analysis.
W.-M. Lu, Q.L. Kweh, M. Nourani et al. Journal of Cleaner Production 295 (2021) 126505

Fig. 3. Political governance and national dynamic energy efficiency.

Fig. 2. Political governance and CPI.
Note: This diagram depicts the association between political governance and CPI.
While political stability, bureaucracy, and personal safety and security of private
property are proxies of political governance, secondary school enrollment rate is a
control variable.
concurrently conforms to the attributes of environmental reference
technology and distinguishes desirable and undesirable outputs.
€re and Grosskopf (2003, 2009) argued that weak disposability is
Fa
consistent with the standard axioms of production theory.
Although substantial supports have emerged for the DDF model, it
is not flawless. Regarding the notion of weak disposability for un-
desirable outputs, researchers have disputed the validity of equality
constraints under weak disposability assumptions (Chen and
Delmas, 2012; Førsund, 2009). Leleu (2013) discussed that an
equality sign means that unconstrained shadow prices are associ-
ated with undesirable outputs. From an economic viewpoint, a
decrease in undesirable output involves economic loss, such as
pollutants. Hence, the cost associated with this loss must be non-
positive. When converted to a dual programming model, the DDF
considers that an undesirable output loses its non-negative
constraint, theoretically implying the positive cost of this change.
In another stream of non-radial models, Tone (2001) and Tone
and Tsutsui (2009, 2010, 2014) introduced the slack-based mea-
sure (SBM) model. The SBM does not lean on weak or strong
disposability assumptions and recognizes a non-dominated target
for benchmarking in a production possibility set. Predetermining a
directional vector is unnecessary because a decision-making unit
(DMU) is free to select the improvement directions in accordance
with maximizing its efficiency score.
The SBM model is a general form of distance function measure
wherein the inputs and outputs are free to have different distance
parameters (Tone, 2001). To achieve full efficiency, the SBM allows
input and output vectors to non-proportionally reduce or expand,
Note: This diagram depicts the association between political governance and national
dynamic energy efficiency. While political stability, bureaucracy, and personal safety
and security of private property are proxies of political governance, CPI and secondary
school enrollment rate are treated as control variables.
respectively, as opposed to the radial efficiency models. Input and
output vectors can be altered simultaneously (Kao, 2018). The
model provides a reliable efficiency estimation for under-
performing DMUs.
This study employs the DDEA model with an undesirable output
while considering carry-over activities as proposed by Tone and
Tsutsui (2010). Fig. 4 shows that capital is the carry-over carried
from one term to another and assumes that n DMUs (j ¼ 1, …,n)
emerge over T periods (t ¼ 1, …,T). At each period, DMUs have m
desirable inputs (i ¼ 1, …,m), s desirable outputs (r ¼ 1, …,s), and q
undesirable outputs (p ¼ 1, …,q). In this study, xijt (yrjt ; ybpjt ) rep-
resents the amounts of desirable inputs used respectively by
desirable and undesirable outputs produced by DMUj at period t.
The notion zhjt (h ¼ 1, …,nfree; j ¼ 1, …,n; t ¼ 1, …,T) is the amount
of carry-over (link) between t and tþ1 periods, and nfree is the
number of carry-over (link). The notions are all observed values up
to period T, and N DMUo (o ¼ 1, …,n) is the observed one.
This study employs the cooperative idea of Kao (2018) by adding
relevant constraints to the efficiency evaluation model. The coop-
erative idea is followed for two reasons (Kao, 2018). One, to meet
the continuity condition, the carry-over item taken from the former
period (e.g., time t) must be equal to that taken from the latter
period (e.g., time tþ1). Two, when the two divisions are operating
independently, responsible managers from the former period (e.g.,
time t) aim at maximizing the production, whereas those from the
latter period (e.g., time tþ1) aim at minimizing the production to
achieve better efficiency.
Non-oriented efficiency was solved as follows:

2 0 13
PT Pm s Pq sb Pnfree sfree
1 4 1 @ A5
t¼1 1  mþqþnfree þ þ
it pt ht
T i¼1 xiot p¼1 ybpot h¼1 zhot

TE0 ¼ min " !# (1)

1
PT 1
Ps sþ Pnfree sfreeþ
T t¼1 1þ sþnfree
rt
r¼1 yrot þ ht
h¼1 zhot

5
W.-M. Lu, Q.L. Kweh, M. Nourani et al. Journal of Cleaner Production 295 (2021) 126505

Fig. 4. The assessment framework of national dynamic energy efficiency.

Note: This diagram depicts the assessment framework of national dynamic energy efficiency. The observed periods are T and Tþ1, and countries from A to N. The inputs are labor
force and energy consumption, the inputted carry-over is capital, and the desirable (undesirable) outputs are GDP (carbon dioxide emissions.

respectively.
ltj represents the intensity of DMUj at time t. Equations (2)e(4)
S:T:
Xn delineate the constraints for the inputs and desirable and unde-
(2)
x l þ s
t
xiot ¼ j¼1 ijt j it ; ði ¼ 1; :::; m; t ¼ 1; :::; TÞ sirable outputs, and Equations (5)e(7) specify the carry-over items
as being freely determined while satisfying the continuity
Xn assumption between inputs and outputs. The values are allowed to
 sþ
t
yrot ¼ y l
j¼1 rjt j rt ; ðr ¼ 1; :::; s; t ¼ 1; :::; TÞ (3) reduce or expand from the observed one. Equation (8) defines the
VRS assumption. Accounting for Equations (2)e(8) in an optimum
Xn t
solution of Equation (1),
ybpot ¼ yb l
j¼1 pjt j
þ sb
pt ; ðp ¼ 1; :::; q; t ¼ 1; :::; TÞ (4)

Xn Xn n
* þ*
z l ¼
t
z l
tþ1
; ðch; t ¼ 1; :::; T  1Þ (5) lt*
j ; j ¼ 1; :::; n; sit ; i ¼ 1; :::; m; srt ; r ¼ 1; :::; s;
j¼1 hjt j j¼1 hjt j
o
freeþ free
sb
pt ; p ¼ 1; :::; q; sho ; sho ; h ¼ 1; :::; nfree :
Xn
zhot ¼ z lt
j¼1 hjt j
 sfreeþ
ht
; ðh ¼ 1; :::; nfree; t ¼ 1; :::; TÞ (6)
The result is a value ranging between 0 and 1 for each DMU
when all the excesses and shortfalls are 0. When TEo* ¼ 1 in Equa-
Xn tþ1 free
zhot ¼ z l
j¼1 hjt j
þ sht ; ðh ¼ 1; :::; nfree; t ¼ 1; :::; T  1Þ tion, (1), the target DMU is affirmed to be overall efficient:

(7)
2 0 1
Xn Pm s* Pq sb* Pnfree sfree*
lt ¼ 1; ðt ¼ 1; :::; TÞ 41  1 @ it
þ pt
þ ht A
mþqþnfree i¼1 xiot p¼1 ybpot h¼1 zhot
j¼1 j
(8) *
TEot ¼ " !# : (9)
ltj  0; s þ b freeþ
it  0; srt  0; spt  0; sht
free
 0; sht  0: Ps Pnfree sfreeþ*
1 sþ*
1þ sþnfree
rt
r¼1 yrot þ ht
h¼1 zhot
þ b freeþ
where s
it , srt , spt , sht , and sfree
ht
are the input excess, desirable
When TEot * ¼ 1 in Equation (9), the target DMU is confirmed to
output shortfall, undesirable output excess, carry-over output
shortfall at time t, and carry-over input excess at time tþ1, be efficient in period t with zero excesses and shortfalls.
6
W.-M. Lu, Q.L. Kweh, M. Nourani et al. Journal of Cleaner Production 295 (2021) 126505

3.3. Sample data source

Note: This table summarizes the referenced input and output variables in terms their respective unit of measurement and definitions. These variables are sourced from (1) The World Bank, (2) TI, (3) IMD (World Competitiveness
(Hu and Wang, 2006; Yang et al., 2015; Zhang et al.,

This study employed data from 2007 to 2016 to observe multi-

year changes in the dynamic energy efficiency of sampled coun-
tries under different technical standards. After the elimination of
countries with incomplete data and non-sovereign states, data
from 49 countries comprised the final sample. The main data
sources were the World Competitiveness Yearbook published by
IMD, the CPI published by TI, and the World Bank database.
2011; Zhou et al., 2006)

3.4. Definitions of variables

Three inputs (i.e., capital, labor force, and energy consumption)

Reference

and two outputs (i.e., GDP and carbon dioxide emissions) were
used to determine the national dynamic energy efficiency. In
generating higher demand in the economy, a country employs
Measurement of economic situations within a country, which includes the market price of all final goods and

labor force and uses renewable and non-renewable energy with

the help from fixed assets such as property, plant and equipment.
According to the accounting concept of carry-overs (Warren et al.,
People aged at least 15 years and in line with the International Labour Organization’s definition of an

2020), items that are accumulated and carried over from one
current accounting period to another are different from those
being expensed off in the current accounting period. As capital
meets this carry-over concept, this study classifies capital as an
inputted carry-over variable. While GDP is the desirable output
from the inputs, carbon dioxide emissions, being the undesirable
output, denotes where this study takes into account environ-
mental impact factors. Energy efficiency is positively related to
total factor productivity (Stern, 2012), while carbon dioxide
emissions are more prevalent in low-income countries (Haseeb
Added fixed asset expenditure plus net change value in reserves

and Azam, 2020). An almost-similar concept can be seen in Li

Tons of oil equivalent Greenhouse gases produced by the combustion of fossil fuels

et al. (2019) and Javeed et al. (2020) about environmental pol-

icies and performance at the firm level and in Sinha et al. (2019)
Yearbook), and (4) Directorate General of Budget, Accounting and Statistics, Executive Yuan, The Republic of China.
Total sum of renewable and non-renewable energy use

and Chen et al. (2018) about corruption and environmental

quality. Overall, the selections of inputs, carry-over, and outputs to
services produced during a year in the country

estimate national dynamic energy efficiency are in line with prior

studies (Hu and Wang, 2006; Yang et al., 2015; Zhang et al., 2011;
Zhou et al., 2006). Table 1 exhibits the relevant definitions.
Political governance was also decomposed to further explore
the relationship between CPI score and national dynamic energy
economically active population

efficiency. Table 2 shows the related definitions.

4. Empirical analysis

4.1. Dynamic energy efficiency of countries globally

Definition

A sustainability concept from the energy-efficiency perspec-

tive was integrated to measure the dynamic energy efficiency of
sample countries from 2007 to 2016. The higher the efficiency
value, the more favorable the performance measured. Efficiency
Tons of oil equivalent

reached the benchmark if the value was equal to 1. Conversely,

improvement was necessary if the value was 0. The countries
USD (millions)

USD (millions)
No. of people

were divided into three regions, namely, Asia, Europe, and the
(millions)

(millions)

(millions)

Americas, covering a total of 49 countries. These countries were

classified according to the World Bank’s classification of annual
Unit

income into high-income, upper-middle-income, and lower-

Definitions of inputs and outputs.

middle-income countries for comparative analysis.

Undesirable
carry-over

Desirable

Table 3 shows that the average efficiency value in Europe was

Inputted

output

output

0.762, which was 6.24% higher than the overall average of 0.6996,
Input

Input
Type

with the overall dynamic energy efficiency of the region having

risen slowly since the 2008 global financial crisis. By contrast, the
consumption

Carbon dioxide

average efficiency in Asia after 2008 fluctuated but exhibited a

emissions
Labor force

declining trend, with an average efficiency of 0.5765 being the

Variable

worst of the three regions. The KruskaleWallis test (Brockett and

Energy
Capital
Table 1

GDP

Golany, 1996) was employed to identify significant differences in

efficiency among the regions. At 5% significance level, the
7
W.-M. Lu, Q.L. Kweh, M. Nourani et al. Journal of Cleaner Production 295 (2021) 126505

Table 2
Definitions of regression variables.

Variable Function Unit Definition Source

CPI Main variable Score Scaled from 0 to 100, a high score indicates less corruption TI
Secondary school enrolment Control variable Percentage Net enrolment rate is the ratio of official school-age children enrolled in the The World Bank
rate official school-age population
Raw materials export value Control variable Percentage Ore and metal goods as constituted in Article 27 of the Standard The World Bank
International Trade Classification
FDI Control variable USD FDI refers to reported direct investment equity flows in the economy The World Bank
Political stability Political governance Score Score of 0e10; the higher the score, the more stable the politics IMD (World
variable Competitiveness Yearbook)
Bureaucracy Political governance Score Score of 0e10; the higher the score, the higher the quality of the IMD (World
variable bureaucracy Competitiveness Yearbook)
Personal safety security of Political governance Score Score of 0e10; the higher the score, the safer the society IMD (World
private property variable Competitiveness Yearbook)

Note: This table summarizes the regression variables in terms their respective unit of measurement and definitions. The respective sources of variables are also included.

Table 3
Summary of national dynamic energy efficiency values for each region.

Year Asia Europe Americas Overall

National dynamic energy efficiency 2007 0.5607 0.7096 0.5910 0.6531

2008 0.6087 0.7402 0.7474 0.7063
2009 0.5895 0.7638 0.6374 0.6995
2010 0.6058 0.7556 0.7117 0.7095
2011 0.5696 0.7588 0.6959 0.6996
2012 0.5731 0.7882 0.6498 0.7113
2013 0.5634 0.7905 0.6534 0.7107
2014 0.5587 0.7891 0.6272 0.7048
2015 0.5631 0.7671 0.6869 0.7016
2016 0.5723 0.7567 0.6993 0.6996
Kruskal-Wallis test (p-value) Average 0.5765 0.7620 0.6700 0.6996
<0.000

Note: This table reports the yearly national dynamic energy efficiency by three regions, namely Asia, Europe, and Americas. The second last row of numbers are the average
values of the national dynamic energy efficiency over the sample period. The Kruskal-Wallis test shows that national dynamic energy efficiency is significantly different among
countries by region.

Table 4
Summary of the national dynamic energy efficiency values by levels of income.

Year High-income Upper-middle-income Lower-middle-income Overall

National dynamic energy efficiency 2007 0.7492 0.4280 0.4563 0.6531

2008 0.7845 0.5475 0.4786 0.7063
2009 0.8021 0.4654 0.4712 0.6995
2010 0.8047 0.5335 0.3846 0.7095
2011 0.8035 0.5077 0.3444 0.6996
2012 0.8242 0.4982 0.3382 0.7113
2013 0.8198 0.5060 0.3465 0.7107
2014 0.8102 0.4894 0.4020 0.7048
2015 0.7995 0.5332 0.3320 0.7016
2016 0.8027 0.5183 0.3219 0.6996
Kruskal-Wallis test (p-value) Average 0.8000 0.5027 0.3876 0.6996
<0.000

Note: This table reports the yearly national dynamic energy efficiency by three levels of income, namely high-income, upper-middle-income, and lower-middle-income. The
second last row of numbers are the average values of the national dynamic energy efficiency over the sample period. The Kruskal-Wallis test shows that national dynamic
energy efficiency is significantly different among countries by different levels of income.

efficiency values were significantly different among the regions.
Table 4 reveals that high- and low-income countries exhibited
similar trends in average efficiency values. The average efficiency of
high-income countries was the highest at 0.8, 10.04% higher than
the overall average of 0.6996. The upper-middle-income countries
followed at 0.5027, 19.69% lower than the overall average. Lower-
middle-income countries had an average efficiency of 0.3876,
31.2% lower than the overall average. The operational efficiency
value of high-income countries slowly increased after 2008. By
contrast, the overall operational efficiency value of lower-middle-
income countries significantly declined post-2009. As of 2016, the
dynamic energy efficiency of lower-middle-income countries had
yet to recover from the effects of the 2008 financial crisis. The
KruskaleWallis test was employed to investigate significant dif-
ferences among the different high-income and low-income coun-
tries and understand their differences in dynamic energy efficiency
each year. At 5% significance level, the differences had a significant
effect on dynamic energy efficiency.
Under the dynamic energy efficiency assessment framework,
after energy consumption and carbon dioxide emissions were
considered, the national dynamic energy efficiency values (DEVs) of
countries differed significantly according to regional characteristics
and income levels. High-income countries and technologically
advanced regions possessed excellent competitiveness in

8
W.-M. Lu, Q.L. Kweh, M. Nourani et al. Journal of Cleaner Production 295 (2021) 126505

Table 5
Summary of CPI scores in the regions.

Time period Asia Europe Americas Overall

CPI 2007 55.3077 65.0345 52.2857 60.6327

2008 55.6154 64.1034 52.4286 60.1837
2009 55.6154 63.3793 52.1429 59.7143
2010 55.6154 62.7931 52.0000 59.3469
2011 56.0000 62.5862 51.7143 59.2857
2012 56.9231 63.4138 53.8571 60.3265
2013 56.7692 63.6552 53.0000 60.3061
2014 57.1538 64.4138 53.8571 60.9796
2015 56.9231 65.5172 53.0000 61.4490
2016 56.8462 64.9310 52.1429 60.9592
Kruskal-Wallis test (p-value) Average 56.2769 63.9828 52.6429 60.3184
<0.000

Note: This table reports the yearly CPI by three regions, namely Asia, Europe, and Americas. The second last row of numbers are the average values of the CPI over the sample
period. The Kruskal-Wallis test shows that CPI is significantly different among countries by region.

Table 6
Average CPI of countries by levels of income.

Year High-income Upper-middle-income Lower-middle-income Overall

CPI 2007 71.9118 37.8182 27.5000 60.6327

2008 71.0882 38.4545 27.2500 60.1837
2009 70.7647 37.4545 27.0000 59.7143
2010 70.4412 36.7273 27.2500 59.3469
2011 70.5588 36.0000 27.5000 59.2857
2012 69.8529 41.1818 32.0000 60.3265
2013 69.7941 41.1818 32.2500 60.3061
2014 70.5294 41.2727 34.0000 60.9796
2015 71.4118 40.6364 34.0000 61.4490
2016 70.5882 40.5455 35.2500 60.9592
KruskaleWallis test (p-value) Average 70.6941 39.1273 30.4000 60.3184
<0.000

Note: This table reports the yearly CPI by three levels of income, namely high-income, upper-middle-income, and lower-middle-income. The second last row of numbers are
the average values of the CPI over the sample period. The Kruskal-Wallis test shows that CPI is significantly different among countries by different levels of income.

Table 7 than the overall average score of 60.32. The upper-middle- and
Effect of CPI on national dynamic energy efficiency. lower-middle income countries had average scores of 39.13 and
Independent variables OLS Truncated regression 30.4, respectively. In sum, the higher the income level of a country,
Constant 0.0893 0.4410
the more favorable the CPI score, with high-income countries
CPI 0.0068*** 0.0060*** maintaining above-average scores throughout the study period. By
Secondary School Enrolment Rate 0.0024*** 0.0010 contrast, upper- and lower-middle-income countries obtained
Raw Material Export Values 0.0026*** 0.0020*** scores that were nearly half of the overall average, far behind the
Foreign Direct Investment 0.0000 0.0002**
CPI scores of the high-income countries. At 5% significance level,
Number of observations 490
significant differences were noted in the CPIs of countries from
R-squared 0.3957 different income levels.
Adjusted R-squared 0.3908 A panel data regression model was employed to further inves-
Note: This table reports the OLS and bootstrapping truncated regression results of tigate the relationship between CPI and dynamic energy efficiency.
the effect of CPI on national dynamic energy efficiency. ** denotes that p-value < Secondary school enrolment rate (also a substitute for human
0.05, while *** represents p-value < 0.01. capital), raw material export values, and FDI were set as control
variables. The regression results in Table 7 reveal that doubling the
human capital variable increased the efficiency value by 0.24%,
promoting sustainable development. indicating that higher-quality manpower increases overall effi-
ciency. The CPI also exhibited a significant and positive correlation
4.2. Effect of the CPI on dynamic energy efficiency values with dynamic energy efficiency (i.e., when the CPI doubled, the
efficiency value increased by 0.68%). Note that the CPI ranged from
Table 5 presents the performance of the CPI in different regions. 0 (most corrupt) to 100 (least corrupt). For every 1% increase, the
The average CPI for Europe was 63.98, 6.1% higher than the overall overall efficiency value increased by nearly 0.7%. Raw material
average value of 60.32, followed by Asia with 56.28 and, lastly, the export value was also significant but was negatively correlated with
Americas with an average of 52.64. This study tested whether the efficiency. The reason may be because the implementation of low
annual CPIs differed significantly among the regions; the results interest rate policy to boost the economy when the global economy
corroborated that under the 5% significance level, the annual CPIs is at the trough of the economic cycle can directly affect exchange
differed significantly among regions. rate policies due to currency devaluation (which may stimulate the
Table 6 displays a comparative analysis of the high-, upper- output value of exports at the cost of creating extra pressure on
medium-, and lower-medium-income countries. The trends for imported goods). Domestic purchasing power will decline, forming
average CPI and income level are positively correlated. The average a mutual offset phenomenon.
CPI score for the high-income countries was 70.69, 10 points higher
9
W.-M. Lu, Q.L. Kweh, M. Nourani et al.
Table 8
Relationship between political governance variables and the CPI.
Independent Variables 1. CPI
Constant 3.8054***
Secondary School Enrolment Rate
Risk of Political Instability 2.4643***
Bureaucracy 1.4901***
Personal Security and Private Property 6.5555***
Obs. 490
R-squared 0.7823
Adjusted R-squared 0.7810
Note: This table reports the OLS results of the effect of political governance on CPI.
*** represents p-value < 0.01.
For a robustness check, we applied the bootstrapping truncated
regression approach proposed by Simar and Wilson (2007). The
result for the main testing variable remained statistically the same,
meaning that when the countries become less corrupt, the effi-
ciency scores increase. In the bootstrapping approach, the effects of
secondary school enrolment rate and FDI are insignificant and
significant, respectively, as opposed to the OLS method.
4.3. Effect of political governance on the CPI
Various dimensions of integrity are measured because many
factors affect the CPI of a country, and efficiency values may be
influenced by many factors. Influences can be determined by clas-
sifying CPI into political governance variables, particularly gov-
ernment stability, bureaucratic quality, civil liberties, and public
security (Lambsdorff, 2003). In this study, political stability,
bureaucratic quality, personal safety and security of private prop-
erty, and legal and regulatory framework were measured from
0 (worst) to 10 (optimum) based on the collected data, and the
relevant variables were defined as follows.
Political stability: The ability of a government to plan and
govern the future direction of a country. These goals can be ach-
ieved through a highly centralized government, strong legislative
authority, and support from the country’s citizens. A stable political
system means high chances of good policies being enforced, which
indicates that the system is efficient. As politicians work within a
stable framework, they become less likely to be corrupted, and the
chances of reaching societal consensus are elevated. Hence, high
overall integrity lowers the risk of political instability.
Bureaucratic quality: An administrative body must be inde-
pendent of political pressure that uses existing recruitment and
training mechanisms. Government services are characterized as
being strong and possessing professional knowledge. Without
these characteristics, civil servants may create bottlenecks and raise
their income through corruption. Once corruption becomes an
ethos, the bureaucracy becomes less concerned with other matters,
including political pressure. Therefore, corruption can cause an
inefficient bureaucracy.
Personal safety and security of private property: This variable
includes freedom to live without fear of physical harm, freedom of
speech and belief, personal autonomy, and human and economic
rights. A government that restricts fundamental rights to liberty
and property is often distorting market values, leading people to
look for illegal methods to circumvent regulations and create op-
portunities for corruption.
Legal and regulatory frameworks: A favorable legal and regu-
latory framework signifies a country with a robust and accepted
judicial system, a strong court system, and an orderly mechanism
for the transfer of power. Legal and regulatory frameworks can be
seriously violated by corruption. If judicial decisions and laws can
Journal of Cleaner Production 295 (2021) 126505
Table 9
Relationship between political governance variables and national DEV.
2. CPI Independent Variables OLS Truncated regression
41.4262*** Constant 0.1424 0.496
0.5257*** CPI 0.0087*** 0.008***
2.4731*** Secondary School Enrolment Rate 0.0011 0.002***
2.4561*** Risk of Political Instability 0.0005 0.007*
4.8396*** Bureaucracy 0.0534*** 0.059***
Personal Security and Private Property 0.0163* 0.013*
490
0.8288 Obs. 490
0.8273 R-squared 0.4194
Adjusted R-squared 0.4134
Note: This table reports the OLS and bootstrapping truncated regression results of
the effect of political governance on national dynamic energy efficiency. *, **, and
*** denote the significance levels at the 0.10, 0.05, and 0.01 levels, respectively.
be bought, then a country’s citizens will no longer believe in justice.
When power can be bought and is not subject to orderly transfer, a
space for corrupt behaviors opens.
Collinearity diagnosis was conducted prior to the correlation
regression analysis to avoid collinearity among variables that could
cause invalid regression results. The result validated that bureau-
cratic quality was highly collinear with the legal and regulatory
frameworks. When the legal and regulatory framework variable
was removed and the collinearity diagnosis was performed again,
no collinearity was found.
The results in Table 8 corroborate that the CPI was greatly
affected by political governance variables. The regression results
confirmed that political stability, bureaucratic quality, and personal
safety and security of private property exhibited significant and
positive effects on the CPI, findings that are in line with those of
past studies (Haass and Ottmann, 2017; Mohamadi et al., 2017).
Regarding political stability and bureaucratic quality, doubling their
scores led to the CPI increasing by 247% and 245%, respectively. The
personal safety and security of private property exhibited the
greatest effect, where doubling its score increased the CPI by 483%.
These results imply that when people’s liberty and property can be
protected under a stable political environment with a high-quality
bureaucratic system, their sense of the country’s integrity and
desire to discipline themselves will be enhanced, forming a
virtuous cycle of reinforcement.
4.4. Effect of political governance on national dynamic energy
efficiency values
Table 9 presents the relationship between political governance
variables and national DEVs. A stepwise regression method was
used to determine the relationship. From the equations, the polit-
ical governance variables that affected dynamic energy efficiency
reached significance after secondary school enrolment rate was
added as an alternative control variable for human capital.
Doubling political stability and the personal safety and security of
private property increased the DEVs by 2.2% and 5.8%, respectively.
Bureaucratic quality exhibited a negative change with the DEV,
regardless of whether the CPI or human capital was added (see
regression equations [2], [4] and [5]). When bureaucratic quality
was doubled, the DEV was reduced by 3.2%e5.3%. This phenome-
non is noteworthy because production inputs were previously
emphasized in the measurement of efficiency, such as conventional
capital, labor, and output evaluation of GDP. If this intuitive
framework was assumed, then positive benefits between the inputs
and outputs may be supported. However, the negative effects of
increased energy consumption and environmental pollution on
efficiency mean that rigid and conservative bureaucracies may be
10
W.-M. Lu, Q.L. Kweh, M. Nourani et al.
Fig. 5. Political governance, CPI, and national dynamic energy efficiency.
Note: This diagram depicts the mediation effect of CPI on the association between
political governance and national dynamic energy efficiency. Political stability, bu-
reaucracy, and personal safety and security of private property are proxies of political
governance.
unable to respond to the changing needs of a country. Kaufmann
and Wei (1999) studied the relationship between wasted time
and capital cost in bureaucracies as a result of bribery, and they
obtained an opposite result to that dictated by the grease money,
finding that countries that spent more on bribery caused unnec-
essary inefficiency. In short, political governance affects national
dynamic energy efficiency, in line with Hypothesis 1.
Bureaucratic quality had a negative effect on dynamic energy
efficiency. Political stability and personal safety and security of
private property had significant and positive effects on dynamic
energy efficiency. A stable political situation enables a government
to concentrate on planning the country’s future direction and
executing these plans through a highly centralized government,
strong legislative authority, and support from the country’s citi-
zens. A more stable political system leads to higher chances of good
policies being enforced, resulting in a more efficient system. Poli-
ticians who work within stable systems are less likely to be cor-
rupted, and cohesion is likely to be enhanced by increasing societal
consensus. In the robustness check, the directions of the results for
political governance variables remained the same. The risk of po-
litical instability became significant when a bootstrapping trun-
cated approach was applied.
The higher the overall integrity, the lower the risk of political
instability. When citizens’ liberty and property are protected under
a stable political environment with a high-quality bureaucratic
system, their sense of the country’s integrity and their desire for
self-discipline are enhanced, forming a virtuous cycle. If rigid and
conservative bureaucracies can be improved by providing space for
flexibility and cooperation with dynamic business environments,
then the efficiency of the country will be improved.
Table 10
Mediator test for political stability, DEV, and the CPI.
Step 1 Step 2
DEV CPI
Constant 0.380 12.809
Political Stability, b1 0.050***
Political Stability 7.442***
CPI
Note: This table reports the multiple linear regression results of how CPI mediates
the effect of political stability on national dynamic energy efficiency. *** denotes the
significance level at the 0.01 level.
Journal of Cleaner Production 295 (2021) 126505
Table 11
Mediator test for bureaucratic quality, DEV, and the CPI.
Step 1 Step 2 Step 3
DEV CPI DEV
Constant 0.524 27.043 0.253
Bureaucratic Quality 0.055***
Bureaucratic Quality 10.385*** 0.050***
CPI 0.010***
Note: This table reports the multiple linear regression results of how CPI mediates
the effect of bureaucratic quality on national dynamic energy efficiency. *** denotes
the significance level at the 0.01 level.
4.5. Corruption perceptions index as the mediator
The mediation effects were tested individually to understand
how the CPI relates to the relationship between political gover-
nance and dynamic energy efficiency (Fig. 5).
To test our Hypothesis 2, we employ a multiple linear regression
analysis to determine how dynamic energy efficiency is affected by
political governance variables because more than one independent
variable existed (i.e., political stability, bureaucratic quality, and
personal safety and security of private property). The variable se-
lection mode was simultaneous regression. Subsequently, the
mediation effect had to be verified (i.e., b31 and b32). However, the
verification of b31 and b32 could only be performed if the results of
b1 and b2 were significant. Therefore, political stability, bureau-
cratic quality, and personal safety and security of private property
had to be significant in the results of b1 and b2 before mediation
effects could be tested (Baron and Kenny, 1986).
As shown in Table 10, Step 1 examined the effect of political
stability on national DEVs using the CPI as the mediator. A simple
regression analysis was initially performed, and the result revealed
that political stability had a significant effect on dynamic energy
efficiency (b1 ¼ 0.050***). Step 2 examined the effect of political
stability on the CPI, and the result revealed that political stability
exhibited a significant effect on the CPI (b2 ¼ 7.442***), which
meant that Steps 1 and 2 met the mediation effect verification. Step
3 involved multiple regression analysis of political stability and the
CPI on national dynamic energy efficiency, which revealed that
political stability did not have a significant effect on dynamic en-
ergy efficiency (b31 ¼ 0.011) and that the b31 coefficient value
was close to 0. Nonetheless, the CPI had a significant effect on dy-
namic energy efficiency (b32 ¼ 0.008***). The CPI mediated the
relationship between political stability and national dynamic en-
ergy efficiency. Political stability enhanced a country’s CPI. Honest
and efficient political governance must be implemented to effec-
tively improve the efficiency of a country.
In Table 11, the effect of bureaucratic quality on national dy-
namic energy efficiency was examined with the CPI used as the
mediator. Step 1 involved a simple regression analysis, which found
that bureaucratic quality had a significant effect on national dy-
namic energy efficiency (b1 ¼ 0.055***). Step 2 examined the effect
of bureaucratic quality on CPI, revealing a significant effect
(b2 ¼ 10.385***), with both meeting the requirements of the
mediation effect test. Step 3 was a multiple regression analysis of
bureaucratic quality and the CPI on national dynamic energy effi-
Step 3
ciency, which found bureaucratic quality had a significant effect on
DEV dynamic energy efficiency (b31 ¼ 0.050***) as did CPI
0.275 (b32 ¼ 0.010***). The CPI mediated the effect of bureaucratic
quality on national dynamic energy efficiency. Bureaucratic quality
0.011
exhibited a negative effect on dynamic energy efficiency after the
0.008***
CPI variable was added. The implication is that after considering the
CPI, although bureaucracy can improve a country’s integrity,
reduction in dynamic energy efficiency may occur due to the
11
W.-M. Lu, Q.L. Kweh, M. Nourani et al.
Table 12
Mediator test of personal safety and security of private property, DEV and the CPI.
Constant
Personal Safety and Security of Private Property
Personal Safety and Security of Private Property
CPI
Note: This table reports the multiple linear regression results of how CPI mediates the effect of personal safety and security of private property on national dynamic
energy efficiency. *** denotes the significance level at the 0.01 level.
rigidness of the bureaucracy and the need to balance this rigidness
with the effectiveness of the bureaucracy.
In Table 12, the effect of personal safety and security of private
property on national DEV was determined, with the CPI used as the
mediator. In Step 1, a simple regression analysis of personal safety
and security of private property on dynamic energy efficiency was
performed, and the result revealed a significant effect
(b1 ¼ 9.380***). Step 2 examined the effect of personal safety and
security of private property on the CPI, also revealing a significant
effect (b2 ¼ 9.380***). Both met the requirements of the mediation
effect test. Step 3 was a multiple regression analysis of CPI and
personal safety and security of private property on dynamic energy
efficiency, with the result revealing that the effect of personal safety
and security of private property was not significant on dynamic
energy efficiency (b31 ¼ 0.006), and the b31 coefficient value was
close to 0. CPI exhibited a significant effect on dynamic energy ef-
ficiency (b32 ¼ 0.008***).
The CPI mediated the effect of personal safety and security of
private property on dynamic energy efficiency, meaning that a
country’s integrity can be enhanced with greater personal safety
and security of private property. When life quality improves, rent-
seeking is reduced, enhancing a country’s integrity. Honest and
efficient policy must be effectively implemented to improve a
country’s dynamic energy efficiency. In summary, CPI mediates the
relationship between political governance and national dynamic
energy efficiency.
5. Conclusion
This study aims to explore the relationship between the CPI and
the national dynamic energy efficiency of 49 countries for the
2007e2016 period. Different from previous studies, this study
considers both the dynamic factor of capital and energy efficiency.
Results corroborate that European and high-income countries
perform significantly better than others in terms of national dy-
namic energy efficiency and CPI. The CPI has a significantly positive
effect on national dynamic energy efficiency. The proxies of polit-
ical governance affect national dynamic energy efficiency, such as
political stability, bureaucratic quality, personal safety and security
of private property, and legal and regulatory frameworks. The CPI
has a mediating effect among variables, such as political stability,
personal security and private property, and national dynamic en-
ergy efficiency.
The results of the study found that if the country’s dynamic
energy efficiency performance alone is divided by region, Europe as
a whole performs best, followed by the Americas, and Asia per-
forms the worst. If the criterion used is the overall country’s DEV
performance, then the advantages and disadvantages are arranged
as follows: high-income countries, middle-high-income countries,
and middle-low-income countries. For most emerging economies
that comprise the Asian region, if their efficiency is measured by
traditional gross domestic production alone, then they must have
had significant growth in the past 10 years. However, if you
Journal of Cleaner Production 295 (2021) 126505
Step 1 Step 2 Step 3
DEV CPI DEV
0.251 2.090 0.268
0.067***
9.380*** 0.006
0.008***
consider their energy consumption and the negative externalities
of the pollution caused by the environment in the production
process, their overall national DEV is still based on the economic
growth and ecological environment balance, and the mature and
advanced technology level European countries perform best. At the
same time, high-income countries perform best in productivity.
When discussing whether differences exist in the CPI between
regions and countries with different income levels, I found that if
we look at it from a regional perspective, the overall corruption
performance of European countries is still the best, followed by
Asian countries and American countries, which are high. The ob-
tained countries also have a higher degree of incorruptibility. This
study also used the KruskaleWallis Test in the statistical verifica-
tion method without parent numbers to test. At a significant level
of 5%, the incorruptibility impression index of different regions and
income levels were found to have significant differences, indicating
certain differences in the corruption impression index whether it is
explored by region or income level.
In sum, when governments want to improve their national dy-
namic energy efficiency through better CPI, they must consider
various political governance mechanisms (e.g., governments
should pursue political stability, personal safety, and the
improvement of private property). Monitoring the legal system and
implementing effective management of public officials as well as
other effective policies and planning are also important measures.
CRediT authorship contribution statement
Wen-Min Lu: Methodology, and Framework, Formal analysis,
Data curation, Supervision, Project administration. Qian Long
Kweh: Conceptualization, Writing e original draft, Writing e re-
view & editing, Project administration. Mohammad Nourani:
Writing e review & editing, Validation, Visualization. Cheng-Yi Lin:
Writing e original draft, Investigation, Resources.
Declaration of competing interest
The authors declare that they have no known competing
financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
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