Investment efficiency of urban infrastructure systems: Empirical measurement and implications for China

Abstract

Infrastructure investment is vital to a nation's long-term development and its performance needs to be carefully evaluated to ensure the effectiveness, efficiency, and equity of infrastructure decisions. Though some studies attempt to evaluate the development level of infrastructure systems, most of them focus on economic influence but neglect other aspects such as societal benefits. To advance the accuracy of the current method, we expanded a multi-attribute evaluation framework based on a data envelopment analysis (DEA) based Malmquist productivity index (MPI) to evaluate the longitudinal efficiency of China's infrastructure investment. The statistical data from 2004 to 2014 in 30 provincial-level administrative divisions were collected as inputs and outputs of the model for a dynamic cross-provincial comparison. We found that, firstly, the overall efficiency of infrastructure investment during the study periods was improved by 2.4% and the increase was primarily due to technical change rather than efficiency change. Secondly, an uneven distribution of the efficiency level existed among different regions, with the eastern region as the best performance of an average MPI of 1.067 and the western region being the lowest. Thirdly, each provincial-level administrative division exhibited a distinctive changing profile over the period, with Beijing (20.5%) and Shanghai (20.4%) as the fastest growing provinces yet Shandong the slowest (−13.1%). The yearly change, its interpretation and in-depth analysis of MPI's decomposition have also been discussed. The proposed approach and findings can provide insights for making long term investment strategies and infrastructure policies in China and similar countries.