Colouring the socio-economic development into green: I-distance framework for countries’ welfare evaluation


The indicator-based
research papers represent a substantial part of socioeconomic sphere,
but the controversy about the choice of indicators and aggregation
methods still remains. The aim of our paper is twofold: first, to
elaborate the use of indicators in assessing socioeconomic development
and welfare of countries, and in particular, to review the socioeconomic
and welfare indicators in order to form a theoretical framework.
Secondly, the idea of the paper is to emphasize the importance of
incorporating environmental indicators into the evaluation of
socioeconomic development. To this end we suggest the implementation of
ecological footprint and environmental performance index, along with
frequently used indicators such as GDP per capita, unemployment rate,
etc. In addition, applying a statistical I-distance method we were able
to overcome the problems concerning the aggregation of composite
indicator using presumably biased weighting factors. As a case study we
analyzed a dataset of 25 European Union countries, starting with 2007
and ending with the last available data of 2012. The results presented
in this study clearly indicated EU countries with high level of
socioeconomic development, with a special emphasis on the underlying
dynamics of a five-year period. One of the contributions lies in the
application of an I-distance method which can easily integrate economic,
social and environmental variables with different measurement units
into one composite indicator. Moreover, our approach could be a
foundation for an appropriate framework of countries’ welfare evaluation
which would be unbiased i.e. independent from subjectively formed
weighting factors. The ecological footprint and environmental
performance index as environmental indicators proved to be essential
part of an I-distance framework for countries’ welfare evaluation.