Analyzing the Influence of Philanthropy on Eco-Efficiency in 108 Countries

Abstract

This paper analyzes philanthropy’s influence on countries’ eco-efficiency. The hypothesis to be verified is that philanthropy can favour the eco-efficiency. A data panel was built with statistical information from 2009 to 2018. Two methods were applied. First, a Data Envelopment Analysis model output oriented was estimated to identify the situation of overall efficiency in countries. We consider the relationship between Gross Domestic Product per capita and carbon dioxide per capita as our desirable and undesirable products, respectively. The second estimated method was a Stochastic Frontier, through which it was possible to assess the impact of philanthropy on eco-efficiency (rank of overall efficiency from DEA). Assessing the average eco-efficiency of countries around the world, it is possible to state that the results are worrying, since they reveal a fall in the average eco-efficiency of the countries over the years. Moreover, according to the second econometric model, the philanthropy index positively impacts on eco-efficiency. These empirical results fill a gap in the literature on donations’ effect on countries’ eco-efficiency. They allow policymakers to see how philanthropy can be one more tool to help countries improve their eco-efficiency. However, there is a warning that some attention is needed (control and regulation) for the best use of donations.