Setting handicaps to industrial sectors in DEA illustrated by Ethiopian industry

In the ordinary macro-economic input-output tables, the industrial sector consists of several dozen industries and each industry in a certain sector is an aggregate of many companies in the sector. The sectoral statistics are the sum of statistics of companies in the respective sector. Usually, all sectors have the same set of inputs for producing outputs. For example, they have labour, capital and intermediate as input and amount of production as output. We can apply traditional DEA models for evaluation of efficiency regarding all sectors by means of these common input and output factors. However, there remain some insecure feelings in comparing all sectors as a scratch race. Some sectors are in fields with matured technologies, while others are in emerging fields. Some are labour intensive, while others are capital intensive. These situations lead us to compare sectors under a handicap race. In this paper, we propose a new DEA