Industrial eco-efficiency, regional disparity, and spatial convergence of China's regions

Abstract

In this study, the industrial eco-efficiency measures of 30 Chinese provinces (municipalities and autonomous regions) from 2001 to 2015 were estimated based on a proposed data envelopment analysis (DEA) model and the non-convex metafrontier-undesirable outputs-super efficiency-slacks-based measure (NCMeta-US-SBM) which simultaneously incorporates non-convex metafrontier technology, undesirable outputs, and super efficiency into slacks-based measure. Subsequently, dynamic spatial econometric models were employed to test the spatial convergence of industrial eco-efficiency. The empirical results show that: 1) the average value of industrial eco-efficiency was the highest in the eastern region (0.67), followed by the western region (0.30) and central region (0.27), indicating the existence of a significant regional disparity. 2) Strong evidence for global and club spatial convergence of industrial eco-efficiency was found. With regard to regional heterogeneity, provinces in the eastern region converged faster than those in the central and western regions; while the convergence speed of industrial eco-efficiency increased after 2008 with respect to temporal heterogeneity. 3) The ownership structure appeared to have a higher impact on industrial eco-efficiency than other controls in the presence of spatial conditional β-convergence. These findings are robust with regard to both spatial econometric model and spatial weighting matrix specifications. Based on the empirical analysis, the following policies promote industrial eco-efficiency in China have been recommended. First, relevant authorities must take effective measures to encourage the central/western regions to adopt clean energy technologies. The energy subsidy policies should strive to break through the technological lock-in and turn to regional green development. Second, full advantage of the spatial effects must be taken and technological exchanges and cooperation among neighboring areas must be strengthened to ensure that the industrial eco-efficiency of the central and western regions converge with those of the eastern coastal areas. Policy implications of multidimensional heterogeneity and adjustment of industrial structure should be highlighted while promoting industrial eco-efficiency. Finally, it is crucial to emphasize factors, such as foreign direct investment (FDI), ownership and industrial structures to attract FDI and optimize the current industrial structure.