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Energy efficiency in the Chinese provinces: a fixed effects stochastic frontier spatial Durbin error panel analysis

Author

Listed:
  • Lei Jiang

    (Zhejiang University of Finance and Economics
    University of Groningen)

  • Henk Folmer

    (University of Groningen
    Northwest A&F University)

  • Minhe Ji

    (East China Normal University)

  • Jianjun Tang

    (Queen’s University Belfast)

Abstract

Energy efficiency improvement has been a key objective of China’s long-term energy policy. In this paper, we derive single-factor technical energy efficiency (abbreviated as energy efficiency) in China from multi-factor efficiency estimated by means of a translog production function and a stochastic frontier model on the basis of panel data on 29 Chinese provinces over the period 2003–2011. We find that average energy efficiency has been increasing over the research period and that the provinces with the highest energy efficiency are at the east coast and the ones with the lowest in the west, with an intermediate corridor in between. In the analysis of the determinants of energy efficiency by means of a spatial Durbin error model both factors in the own province and in first-order neighboring provinces are considered. Per capita income in the own province has a positive effect. Furthermore, foreign direct investment and population density in the own province and in neighboring provinces have positive effects, whereas the share of state-owned enterprises in Gross Provincial Product in the own province and in neighboring provinces has negative effects. From the analysis it follows that inflow of foreign direct investment and reform of state-owned enterprises are important policy handles.

Suggested Citation

  • Lei Jiang & Henk Folmer & Minhe Ji & Jianjun Tang, 2017. "Energy efficiency in the Chinese provinces: a fixed effects stochastic frontier spatial Durbin error panel analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(2), pages 301-319, March.
    • Handle: RePEc:spr:anresc:v:58:y:2017:i:2:d:10.1007_s00168-016-0782-5
    DOI: 10.1007/s00168-016-0782-5
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    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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