Measuring the performance of international trade using a DEA-based approach with trade imbalances consideration

Accurate measurement of international trade efficiency is a matter of concern to all countries due to the significant role trade plays in economic development. Trade imbalances, commonly appearing as a trade surplus or trade deficit, always occurs among countries participating in trade and greatly affects trade efficiency. The total amount of annual export/import transactions can be assumed to be fixed since the whole world market is constant for each year. However, few studies have considered such two significant factors simultaneously during evaluation. Therefore, this paper propose a fixed-sum data envelopment analysis approach and take trade imbalances into account to evaluate trade efficiency of 50 economies from 2012 to 2016. Results show that trade efficiencies of the economies varies greatly. Some trade powers such as China, the United States, and Japan do not perform as well as their trade volume. The high-effciency trade economies are geographically concentrated. Moreover, using three different trade imbalances tolerance levels resulted in no significant changes in the trade efficiency and ranking of economies. Our research results can provide more information for formulating relevant trade policies.