Abstract
This paper examines the efficiency of China’s transportation infrastructure investment to explain regional differences in efficiency on the basis of government integrity. First, we used a three-stage DEA (Data Envelopment Analysis) model to eliminate the influence of environmental factors and statistical noise and measured the investment efficiency of transportation infrastructure in 31 provinces of China from 2007 to 2017. In addition, we used a truncated regression to calculate the efficiency of infrastructure investment in relation to government integrity to explain the regional differences in investment efficiency. The research results show that, (1) after excluding the environmental and random factors, the adjusted sample investment efficiency value is significantly improved in comparison to the traditional DEA. This shows that environmental factors in various provinces reduce government investment efficiency, which suggests that a traditional DEA model would underestimate investment efficiency. (2) The provinces with higher efficiency in transportation infrastructure investment include, among others, Guangdong, Hebei, Henan, Jiangsu, Liaoning, and Tianjin; all are located at the efficiency frontier, while regions with better economic development, such as Beijing and Shanghai, exhibit rather low investment efficiency values. This may be due to the fact that transportation infrastructure investment in these regions has become saturated, resulting in an inevitable decrease in efficiency when investment continues to flow. (3) Low degree of government integrity significantly reduces the efficiency of infrastructure investment. On average, reduction of 1% in government integrity would lead to a decrease of 0.16 percentage points of the technical efficiency of government transportation infrastructure investment.
Highlights
Numerous studies have demonstrated the positive contribution of transportation infrastructure investment to economic growth
(2) Based on the results before and after the adjustment, after the exclusion of environmental and random factors, the adjusted sample investment efficiency value is significantly improved in comparison with the efficiency value through the traditional Data Envelopment Analysis (DEA) measurement, which indicates that the environmental factors of the provinces reduced the government investment efficiency
Using the three-stage DEA model, we applied the Stochastic Frontier Analysis (SFA) method to eliminate the impact of environmental factors and random noise and to measure the efficiency of transportation infrastructure investment in 31 provinces from 2007 to 2017
Summary
Numerous studies have demonstrated the positive contribution of transportation infrastructure investment to economic growth. Great importance should be attached to the improvement of government investment efficiency when it comes to restricted public budget and its fiscal sustainability as well as the sustainability of economic growth of economies. Transportation infrastructure investment directly drives the economy and promotes employment, but low efficiency caused by corruption will inevitably hinder the sustainable development of the economy. This paper tackles two questions: what is the efficiency of China’s transportation infrastructure investment and how will the declaration for enhanced government integrity affect it? We use a three-stage DEA model to measure the investment efficiency of transportation infrastructure in 31 provinces in China from 2007 to 2017, and use SFA (Stochastic Frontier Approach) to eliminate environmental factors as well as the impact of random noise on the results. By using the truncated regression, we examine regional differences in transportation infrastructure investment efficiency in relation to government integrity
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