Total factor energy efficiency of regions in China: A nonparametric analysis

Abstract

This study computes the regional total factor energy efficiency (TFEE) in china for the period 1990–2007 by employing DEA-Malmquist. In our DEA-Malmquist model, labor, capital stock and energy consumption are the three inputs and real GDP is the single output. Our empirical results indicate the eastern areas total factor energy efficiency has been on the efficiency frontier surface, the mid-west area is far from that. Before 2000, China's inter-provincial energy efficiency exists remarkable convergency tendency, after 2000, the convergency tendency is weaken. the improvement of technical efficiency is more efficient than technical progress to improve TFEE, which may be related to the rebound effect of technical progress. More efficient production processes and advanced technologies have the positive role to national and three areas energy efficiency improvement. This paper has also carried out empirical analysis on all economic factors constituting the total factor energy efficiency by dynamic panel model. The results show that: it is very crucial to increase the capital investment and increase the conversion of labor to human capital so as to improve the total factor energy efficiency and protect the healthy and rapid economic development in China.