The impact of government integrity on investment efficiency in regional transportation infrastructure in China

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.