Comparison of Economic and Human Development Efficiency in the Asia‐Pacific Region: A Correlation Analysis in the Context of Sustainable Development Goals

ABSTRACT This study examines the efficiency and productivity with which 17 Asia‐Pacific countries (hereafter referred to as the APAC17 countries) transform economic and public resources into human development outcomes over the period 2015–2022, using a dynamic two‐stage framework based on the dynamic network‐directional distance function (DN‐DDF). The first stage treats labour force and gross capital formation as core economic inputs, with gross domestic product (GDP) specified as an intermediate linking variable and PM2.5 air pollution incorporated as an undesirable output to capture environmental externalities associated with economic development. The second stage evaluates government expenditures on health and education for their efficiency in generating human development outputs, including the Human Development Index (HDI) and its related indicators. The results indicate that economic efficiency is highly uneven: China, Indonesia and the Philippines have persistently exhibited low efficiency, whereas Australia, New Zealand and Armenia have maintained high efficiency levels. In contrast, human development efficiency is generally close to full efficiency. This study provides an analytical framework that integrates DN‐DDF to address gaps in prior research and emphasises the importance of institutional reform and public expenditure efficiency in advancing the sustainable development goals (SDGs).