Governance Quality and <scp>SDG</scp> Efficiency in <scp>E7</scp> Economies

ABSTRACT As the 2030 deadline for the Sustainable Development Goals (SDGs) approaches, the challenge for emerging economies is not only how much they invest in development, but how efficiently available economic and fiscal resources are translated into sustainable outcomes. This study reframes the debate from SDG performance to SDG efficiency, defined as the ability to generate SDG outcomes relative to economic capacity and public expenditure. Focusing on the E7 economies—Brazil, China, India, Indonesia, Mexico, Russia, and Türkiye—the paper examines why similar SDG outcomes may reflect different degrees of resource utilization efficiency. Methodologically, the analysis adopts a redesigned two‐stage framework. First, a pooled output‐oriented data envelopment analysis (DEA) with variable returns to scale is implemented using country–year observations as decision‐making units. The SDG Index serves as the output, while log GDP per capita (PPP) and government consumption are treated as inputs, ensuring a common frontier and eliminating mechanical bias. Second, SDG inefficiency scores are examined using the Simar–Wilson double‐bootstrap truncated regression, incorporating governance dimensions and structural controls as environmental determinants. The findings reveal substantial heterogeneity in SDG efficiency across the E7. Countries closest to the frontier are not necessarily the wealthiest. Voice and accountability (VA) consistently reduce inefficiency, whereas some governance dimensions increase inefficiency, likely reflecting transitional administrative costs. Effective public spending improves efficiency, while volatile external capital inflows tend to raise inefficiency. Institutional alignment and fiscal effectiveness are therefore central to advancing SDG efficiency under constrained resources.