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Abstract

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

Measurement and analysis of local government efficiency is important; however, it is also difficult. To measure government efficiency, this paper employs the relative measurement method described in the research literature. It develops and applies an index to measure and rank the government efficiency of 31 provincial governments in China (including autonomous regions and municipalities) from 2001 to 2010. This permits a comparative analysis of provincial government efficiency and of the factors that influence it, among China's eastern, central, and western regions. The findings suggest a high association between the degree of economic development and local government efficiency, and in this respect, a large disparity has been observed between central and western regions on the one hand and the eastern region on the other. It is argued that provincial governments in the central and western regions should focus on improving residents' welfare, the quality of regional economic growth, and the level of social development by constantly enhancing government efficiency, optimizing the supply of public services, controlling the size of government, and thus improving residents' disposable income. © 2014 The Authors. Journal of Public Affairs published by John Wiley & Sons Ltd.


INTRODUCTION

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

Local government efficiency refers to the comparison between financial investment and its effects on local government at all levels (including the Public Security Bureau, the prosecutor's office, and the court), and namely the comparison between government costs and government benefits. It reflects the relation between the process and the results of government performance. In a market economy, by offering public services and managing public affairs, the government, as a resource allocation mechanism, eliminates or reduces market failure, addresses external effects, and improves the efficiency of resource allocation to promote social justice and sustainable development. Highly efficient governments are able to provide comprehensive legal systems, appropriate decision making, excellent services, sound management, and advanced education for the development of enterprises and the economy (Tianwei, 2009a, 2009b). Therefore, government efficiency as an important factor in national strength is in line with corporate efficiency and national rejuvenation (IMD, 2002). To improve Chinese government efficiency, it is urgent to have a comprehensive understanding of the characteristics of government efficiency through measurement and analysis.

However, it is difficult to measure and analyze the efficiency of local governments. On the one hand, the non-marketability of government activities makes it difficult to carry out cost-benefit analyses directly. On the other hand, their monopoly and authority lead governments to violate government policies and regulations, breed corruption, and generate ‘rent seeking’.

Based on relevant quantitative research publications on local government efficiency, this paper conducts a measurement and ranking order of the efficiency of 31 provincial governments in China from 2001 to 2010 (including autonomous regions and municipalities). A comparative analysis is carried out among eastern, central, and western regions in China in terms of provincial government efficiency and its influencing factors. The paper will be organized as follows: after this introduction (part 1), part II is a literature review; part III illustrates the method used to measure government efficiency; part IV presents a system of index measurement for the efficiency of Chinese provincial government; part V reveals the measurement data of China's 31 provincial governments; part VI provides an analysis of the efficiency of provincial government and its influencing factors according to the measurement data; and the paper ends with conclusions and policy recommendations.

LITERATURE REVIEW

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

Government efficiency is calculated on the comparison of costs and benefits from all kinds of activities the government has engaged in; it is ‘the unit of quality vs. quantity, the unit of value vs. efficacy’ (Daqiang, 1988). It is a ratio of outputs from the administrative organization and administrative staff dealing with social and public matters and realizing and achieving administrative target activities and the consumption of manpower, materials and financial resources, time, information, and space (Shoulong, 2003).

The study and measurement of Chinese government efficiency is still in its infancy. Using a theoretical basis from Lindale, a Swedish economist, the equilibrium model or public goods market equilibrium model demonstrates a government's efficiency by calculating the minimum resource consumption versus the budget of the government; in the case of public goods supply, the model calculates the optimal amount of public goods provided by the government for a given resource or budget (Lindahl, 1919). This is an important theoretical basis for the measurement and analysis of government efficiency.

Regarding the measurement of local government efficiency, this research focuses on two aspects: first, which are the measurement methods used for government efficiency; secondly, how to expound and validate the measurement of government efficiency, the contents.

Literature review on measurement methods of government efficiency

The data envelopment analysis (DEA) model is the main theory and method to measure and compare the efficiency of government departments that provide public goods and services (Fox, 2002). Government efficiency is measured as the ratio of two productive input factors: one, service production and, two, department efficiency output, which means one of the factors can be lowered down with the same output. Therefore, this theory and method can provide standards and set a more efficient target for the inefficient government departments in this field, providing a baseline measure or standard.

Data envelopment analysis is a linear program method to build production possibility frontiers through observing efficiency data of the most efficient department, which not only can measure the efficiency of government departments that provide public goods but also can improve their efficiency (Norton, 1994) and effectively deal with multiple input and output variables of local government departments, especially when some variables make it difficult or impossible to define the price (Worthington & Dollcry, 2000).

The main measurement methods of government efficiency currently are the non-parametric frontier method, the parameter frontier method, and index measurement, and they will be described briefly in the following:

  1. The non-parametric frontier method is a mathematical programming method without setting the shape of government efficiency frontiers and creating strict function expression between input and output of government, including the DEA method and the free disposal hull (FDH) method. DEA, based on the concept of a government's relative efficiency, refers to a method that compares the relative efficiency and benefit of some similar-type decision-making units with a multi-input and multi-output system (De Borger, Kerstens, Staat, 2008). This method maps the inputs and outputs of all decision-making units in space and finds its boundary points; those that fall on its boundary are considered to be the most efficient combination of input and output, and the index is defined as 1, whereas those that do not fall on the boundary are considered to be inefficient (Yanjun, 2008). The FDH method is a special type of DEA, because those points that connect with each vertex of DEA frontiers are identified as efficiency frontiers, and the FDH production possibility set is just composed by the vertex points and its inner free disposal points. Because the FDH frontier is in line with or inside of the DEA frontier, so the average efficiency value calculated by the FDH method is usually higher than that by the DEA method (Zong & Tianwei, 2011).
  2. The parameter frontier method is a statistical method of econometrics, including the stochastic frontier approach, thick frontier approach, and deterministic frontier approach. Using the parameter frontier method requires first to define the government efficiency equation function expression and then specify the shape of the efficiency frontier. Then, according to a group of input–output observational data, use the regression analysis method to determine the parameter in the expression, provided certain conditions are met. Lastly, measure the decision-making unit's technical efficiency through the value of the frontier, which is determined by the frontier efficiency function. The two aforementioned methods are the analysis methods that describe the optimal relationship between input and output and assess their efficiency on the basis of government efficiency frontiers. The difference between these two is that the econometric method has a strong policy orientation, which can assess the implementation effect of the policy, whereas the mathematical programming method has a strong effect on management decisions. Although using the same sample data, different assumptions may lead to some discrepancy in the government efficiency value, so it is difficult to determine which one is better.
  3. Index measurement is a method that calculates and compares the indicator's standardized value to assess government efficiency by establishing a government efficiency index system. Because of its simple operation, in the Chinese academic circles, it has become the main method to measure government efficiency and has been widely used to assess government administrative efficiency (Kangping, 2006; Lili, 2012), government efficiency (Renwu & Tianwei, 2004a, 2004b; Tianwei, 2009a, 2009b), government technical efficiency (Tianwei & Renwu, 2011), government scale efficiency (Xuelian, 2007; Fachuan, 2012), and government spending efficiency (Shiyi & Jun, 2008; Qiming & Biao, 2012) in China. Therefore, this paper will measure the provincial government efficiency of China from 2001 to 2010 using this method.

Literature review on the measurement contents of government efficiency

When the measurement method of government efficiency is discussed, scholars home and abroad attach importance to the content of government efficiency that is being measured and that includes financial expenditure efficiency, public service efficiency, and government scale efficiency.

Scholars often measure government efficiency by evaluating the financial expenditure of governments. For example, Afonso, Schuknecht, and Tanzi (2005) chose an index system composed of administration management, education, hygiene, public infrastructure, the area of space, and society stability and measured the public efficiency of 23 industrialized countries by DEA; Afonso and Fernandes (2008) measured and estimated the value of the public expenditure of the local government in Portugal by using the non-parametric frontier method; Tang Tao, Dong Lei, and Zang Xiaolei (2010) evaluated the dynamic situation of the efficiency of financial expenditure in each Chinese province through the non-parametric DEA–Malmquist index analysis method, claiming that each province made just a little progress in expenditure efficiency and that the efficiency level differed considerably among all provinces and regions. Further research indicates that the financial public expenditure efficiency of the local government has been greatly improved in 11 Chinese western provinces or cities (autonomous regions) from 2001 to 2010. Overall, the efficiency is on the rise, but financial expenditure efficiency levels differ greatly among local governments. However, the gap between the various financial expenditure efficiency levels is gradually becoming smaller (Di, 2013; Xiaokun, 2013).

Other research indicates that the efficiency of public procurement centralization is helpful for the improvement of local government efficiency (Jovanovic et al., 2013) and that a higher degree of political engagement increases public sector efficiency (Giordano & Tommasino, 2013).

Some scholars measure government efficiency by evaluating the public service efficiency of the local government. Demei et al. (2013) revealed the characteristics and influencing factors of public service efficiency of the 31 provincial governments in China from 2000 to 2011. They found that provincial government public service efficiency in the eastern area rated the highest, the middle area score was lower, and the western area scored lowest. The provincial government public service efficiency in southwest and northwest China is rather low, whereas the provincial government public service efficiency in middle and southeast China is quite high. Population, gross domestic product per capita, foreign direct investment, and industry structure have a positive effect on the local government public service efficiency and the regional passenger capacity is found to have a negative effect on the local government public service efficiency.

Research abroad shows that there are economies of scale in local government service delivery, that council amalgamation would allow substantial efficiency to be realized in Western Australia (Fogarty & Mugera, 2013), and furthermore, that ethnic fragmentation has reduced the efficiency of the Macedonian municipalities (Nikolov & Hrovatin, 2013).

A major content element for the measurement of local government efficiency has been found to be the evaluation of local government scale efficiency. Xuelian (2007) empirically analyzed the municipal government scale efficiency in China by using DEA; Tianwei and Renwu (2011) evaluated the government scale efficiency when they measured provincial local government operation efficiency from 2000 to 2009 by using the index measurement. They showed that proper government scale control is good for improving government efficiency and achieving regional social development and economic prosperity. Currently, studies on government scales at home and abroad are focusing on a measurement index of government scale and proper scale analysis. However, precisely how to arrive at each actual government scale or how to evaluate the effect of government scales currently lacks empirical analysis. Whether the local government scale is reasonable or not depends on its effective operation and proper costing, that is, government scale efficiency has to be evaluated by considering the relationship between input and output of government scale (Qi & Yangming, 2013).

In addition, some scholars attach much importance to the efficiency of a country or region at the microcosmic level. Retzlaff, Robert et al. (2004) evaluated the technical efficiency of hygiene resource usage in 27 Organisation for Economic Co-operation and Development countries; Andrew and Brian (2000) analyzed the value of the local government fund system in Australia and evaluated its influence on basic local public service levels by transfer payment among governments (Geys, Heinemann, Kalb, 2013); Shengbing (2013) measured and compared education investment efficiency in different Chinese regions by creating an input and output index for regional education systems.

THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

The index measurement adopted in this paper is an important method to quantitatively assess government efficiency. Since the 1980s, the International Institute for Management Development (IMD) in Lausanne, Switzerland, and the World Economic Forum (WEF) in Geneva, Switzerland, have created the index measurement on the basis of national strength. The World Competitiveness Yearbook has been published annually since 1989 to report the competitiveness and government efficiency ranking of a number of countries and regions in the world. As pointed out by the IMD, government efficiency is determined by five indicators: public finance, financial policy, organizational structure, corporate laws, and regulations, and education. These indicators can be subdivided into several sub-indicators and indexes.

The IMD calculates the average for every indicator of government efficiency, the standard deviation of every indicator, and then every indicator's standardized values according to the standard deviation. Through these points and standardized conversion of corresponding indicators and indexes, the IMD ranks the indicators and government efficiency according to the standardized values of government efficiency.

In addition to the index measurement of IMD, another authoritative global body to measure national competitiveness, the WEF, uses index measurement to indirectly measure government efficiency. WEF believes that government quality constitutes an important factor in national economic competitiveness. Since 1980, WEF has annually released the ‘Global Competitiveness Report’, reporting rankings of government quality and competitiveness of countries and regions. ‘Government quality’, the term used by the WEF, is in fact similar to ‘government efficiency’ as calculated by the IMD measurement. It includes important indicators of government efficiency such as the index of public institutions, macroeconomic stability, and government spending. Although the WEF takes a similar calculation method as IMD, the WEF measurement system is also designed from the perspective of national competitiveness. Unlike IMD, however, indicators of the WEF measurement come from surveys of global business giants, not from fixed targets.

As an internationally accepted measurement for government efficiency, index measurement can effectively avoid subjective factors by scientifically selecting its indicators. It can also be used to measure and rank provincial government efficiency in China.

INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

According to the principles of representation, independence, and accessibility, this paper puts all selected indicators into one measurement system. By adopting domestically revealed statistics (all fixed targets), the measurement of government efficiency is based on raw data that can be quantified, and this paper carefully brought together a number of major indicators (total 47) from financial expenditure (namely government costs) and that include complete statistical data to reflect the effect of government investment (i.e., government revenue) (Tianwei & Shaohui, 2005). According to principles from economics, management science, and statistics and in accordance with Chinese characteristics, this paper has designed a comprehensive measurement system for provincial government efficiency consisting of four indicators (government public services, public infrastructure, government size, and welfare of residents), some sub-indicators, and 47 indexes (Table 1).

Table 1. Chinese provincial government efficiency index measurement
IndicatorSub-indicatorIndex
Government public service (24 indexes)Service of science education culture and health (11 items)1. Expenditure on three kinds of science per capita (new product trial fees, testing fees, and subsidies for major research projects) (yuan)
2. Qualified product rate (%)
3. Three kinds of patent application granted (invention patents, utility model patents, and design patents) (one item per 100 000 people)
4. Turnover per capita in technology market (yuan)
5. Primary school students–teachers ratio (reverse index)
6. Secondary school students–teachers ratio (reverse index)
7. Illiteracy, functional illiteracy rate (%) (reverse index)
8. State education budget in the proportion of gross domestic product (GDP) (%)
9. Literary publishing units (one per 100 000 people)
10. Health beds (one per 100 000 people)
11. Health personnel (one per 100 000 people)
Public security service (eight items)12. Three kinds of accident rate (traffic accidents, fires, and environmental pollution) (one per 100 000 people) (reverse index)
13. The loss of three accidents per capita (yuan) (reverse index)
14. Legislation (new legislation, amendments including laws, bills, and regulations) (item)
15. Accepted case in court of first instance (case)
16. Concluded case in court of first instance (case)
17. Arrested suspect by the prosecutor's office (person)
18. Criminal case cracked or registered by the Public Security Bureau (case)
19. Criminal case rate (case per thousand people) (reverse index)
Meteorological service (two items)20. Site for agricultural meteorology service (one per 100 000 people)
21. Seismic monitoring stations (one per 100 000 people)
Social security service (three items)22. Employment agencies (one per 100 000 people)
23. Urban community service facilities (one per 100 000 people)
24. Rural social security network (one per 100 000 people)
Government public infrastructure (11 indexes)Basic social infrastructure (six items)1. Basic infrastructure and renovation investment within state budget (RMB 100m)
2. The ratio of local projects and central government projects in basic infrastructure and renovation investment
3. Basic infrastructure and renovation project completed rate (%)
4. Industrial ‘three wastes’ treatment (waster, residue, and gas waste) efficiency (%)
5. Reservoir capacity per 10 000 people (100 million cubic meters per 10 000 people)
6. Ratio of nature reserve area (%)
Basic urban infrastructure (five items)7. City gas penetration rate (%)
8. Urban public transport vehicles per 10 000 people (unit)
9. Urban road area per capita (square meters)
10. Urban public green area per capita (square meters)
11. Urban public toilets per 10 000 people (one)
The size of government (five indexes) 1. The proportion of administrative staff in the total population (one per 10 000 people) (reverse index)
2. The proportion of administrative employment in the total employment (%) (reverse index)
3. Ratio of government consumption and final consumption (%) (reverse index)
4. Ratio of government consumption and GDP (%) (reverse index)
5. Ratio of income from confiscation and administration in the total revenue (%) (reverse index)
Economic welfare of residents (seven indexes) 1. Per capita net income of rural households (yuan)
2. Per capita urban disposable income of households (yuan)
3. Engel coefficient of rural residents (%) (reverse index)
4. Engel coefficient of urban residents (%) (reverse index)
5. The consumer price index (previous year = 100) (reverse index)
6. Per capita GDP (yuan)
7. Ratio of subsidy expenditure and financial expenditure (%)

RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

Based on the yearbooks from 2001 to 2010 (data from 2000 to 2009) (National Bureau of Statistics, 2011), this paper converts these statistics into raw data, calculates the average index and standard deviation of every indicator, and finally provides standardized values of government efficiency by a weighted average, thus arriving at the results and rankings of the efficiency of 31 provincial governments from 2001 to 2010, as shown in Table 2.

Table 2. The efficiency of Chinese provincial governments 2001–2010
ProvincePart 1Part 2
2010200920082007200620052004200320022001
STDRankSTDRankSTDRankSTDRankSTDRankSTDRankSTDRankSTDRankSTDRankSTDRank
  1. STD refers to the provincial government efficiency in standardized values. The specific measurement is in the book Government Efficiency Measurement by Tang Tianwei. Contact us for more data such as law data, sub-factors, and standardized values.

Beijing0.4530.4930.7420.7010.6720.6220.7610.5310.3810.282
Tianjin0.1770.1880.1980.3550.4040.3550.3050.1480.1280.0314
Hebei0.1480.10120.10110.11100.08110.13100.04120.1850.1560.185
Shanxi−0.0717−0.0716−0.0717−0.0316−0.1924−0.1121−0.1119−0.1222−0.1422−0.1526
Inner Mongolia0.09110.09130.08130.1490.04130.13100.3050.185−0.00316−0.0619
Liaoning0.3560.3350.3050.2960.2160.2260.2480.1570.1090.0810
Jilin0.09110.1590.11100.0711−0.04160.00160.19100.0214−0.01170.0215
Heilongjiang0.10100.2170.2660.1680.1280.1970.3330.1290.08110.0713
Shanghai0.5220.5620.7510.6820.7710.6310.5620.4020.3130.273
Jiangsu0.5310.5910.5130.4330.3850.3740.3330.3330.3810.321
Zhejiang0.4040.4040.3740.3940.4530.4230.2970.2540.3130.264
Anhui−0.0115−0.0716−0.1922−0.1420−0.0618−0.1622−0.12200.10110.1370.116
Fujian−0.03160.0414−0.1521−0.13190.02140.06130.0014−0.02160.07130.0810
Jiangxi−0.1221−0.1119−0.1922−0.1521−0.1220−0.0618−0.2225−0.2527−0.2228−0.3131
Shandong0.3850.3160.2170.2970.1090.0613−0.0415−0.0618−0.02180.099
Henan−0.1019−0.1522−0.1219−0.1522−0.1723−0.2124−0.2024−0.0921−0.0919−0.0921
Hubei−0.1422−0.1119−0.0918−0.0918−0.2025−0.1923−0.0717−0.02160.09100.116
Hunan−0.2023−0.1924−0.2124−0.1523−0.2127−0.2827−0.2928−0.2628−0.2127−0.2330
Guangdong0.1290.12110.09120.03120.1470.178−0.07170.11100.1850.108
Guangxi−0.2124−0.2928−0.3128−0.2827−0.3529−0.3228−0.4129−0.3230−0.2329−0.1424
Hainan−0.2728−0.2527−0.1320−0.2425−0.0919−0.0417−0.1522−0.06180.06140.0810
Chongqing−0.2225−0.2326−0.2626−0.328−0.2025−0.3329−0.2727−0.2226−0.2026−0.1928
Sichuan−0.0818−0.0918−0.2425−0.1824−0.0416−0.1020−0.1522−0.1424−0.1321−0.0116
Guizhou−0.5630−0.5530−0.4630−0.5330−0.4530−0.4530−0.5430−0.2929−0.2630−0.2029
Yunnan−0.2627−0.2025−0.2927−0.3729−0.1521−0.2425−0.2225−0.1222−0.1220−0.0317
Tibet−0.8131−0.8431−0.8431−0.5931−0.8831−0.8331−0.6831−0.4331−0.3731−0.0720
Shanxi0.06140.13100.1590.0113−0.01150.04150.04120.02140.0811−0.0418
Gansu−0.2426−0.3229−0.3929−0.2426−0.1521−0.0919−0.0415−0.0618−0.1624−0.0921
Qinghai0.0813−0.01150.0015−0.02150.1090.1590.08110.09120.0515−0.1424
Ningxia−0.1120−0.1421−0.0216−0.0717−0.2428−0.2426−0.1220−0.1925−0.1523−0.1223
Xinjiang−0.2728−0.17230.03140.01130.06120.09120.2390.0313−0.1925−0.1727

Table 2 consists of two parts, 2010–2006 and 2005–2001. From Table 2, we can deduce that the standardized value of provincial government efficiency in China in the last decade is achieved by calculating the average of the standardized values of each provincial government's efficiency from 2001 to 2010 and then ranking the government efficiency accordingly. The ranking by such measurement generally reflects the Chinese provincial government efficiency in the new era. It can be concluded from Table 1 that Beijing, Shanghai, Jiangsu, Zhejiang, Liaoning, and Tianjin are the top six provinces and that Yunnan, Hunan, Chongqing, Guangxi, Guizhou, and Tibet are at the bottom. The results suggest that the province with better economic performance also shows better performance in the realm of government efficiency.

MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

Using the respective measurement and comparative analysis of the three major regions in China (eastern, central, and western regions) according to the data from Table 2 and Figure 1, this paper finds different trends among the three regions and further develops corresponding measures for improvement to enhance the economic and social performance in low-efficiency regions, to reduce regional income disparities, and to promote the coordinated development of the regional economy in China.

image

Figure 1. 2001–2010 ranking of provincial government efficiency

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The following features are drawn from the results of measuring the efficiency of China's 31 provincial governments from 2001 to 2010 and from the standardized values of the three regions:

  • First, over the last decade, the provincial government efficiency of the eastern region has been higher than that of the western and central regions. The provincial government efficiency of the eastern region has improved, whereas relatively speaking, those of the central and western regions have reduced. The provincial government efficiency in standardized values (STD) of the eastern region has increased from 0.143 in 2001 to 0.227 in 2010, whereas the STD of the central and western regions have decreased, respectively, from −0.093 and −0.105 in 2001 to −0.107 and −0.211 in 2010. We observe the fact that government efficiency of all regions in 2010 may be higher in absolute value than that in 2001 (Figure 2).
  • Second, using the indicator of public service from 2001 to 2010, we note that the western region has a higher starting point than the eastern and central regions. The public service measure then gradually decreases to the turning point in 2003 when it falls below that of the eastern region and remained higher than that of the central region. By 2010, the public service output of the eastern region is highest followed by that of the central and western regions, respectively. During the decade, the average STD is 0.102 for the eastern region, −0.002 for the western region, and −0.223 for the central region (Figure 3).
  • Third, the indicator of public construction from 2001 to 2010 illustrates that the eastern region has a higher output than the central and western regions. During the decade, the STD average is 0.255 for the eastern region, −0.115 for the central region, and −0.221 for the western region (Figure 4).
  • Fourth, the indicator of government size from 2001 to 2010 shows that the eastern region has a higher output of public infrastructure than the central and western regions except in 2003 when the eastern region has a slightly lower output than the central region. During the decade, the STD average is 0.250 for the eastern region, 0.084 for the central region, and −0.313 for the western region (Figure 5).
  • Fifth, looking at the indicator of economic welfare of residents from 2001 to 2010, we notice that the eastern region has a higher score than the central and western regions. During the decade, the STD average is 0.472 for the eastern region, −0.191 for the central region, and −0.413 for the western region (Figure 6).
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Figure 2. 2001–2010, provincial government efficiency comparison of eastern, central, and western regions in China. According to the division in the 2006 Statistical Yearbook of the Chinese National Bureau of Statistics, the eastern region in China (including the northeast region, a total of 13 provincial-level local governments) refers to Beijing, Tianjin, Hebei, Liaoning, Jilin, Heilongjiang, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan; the central region (including six provincial-level local governments) refers to Shanxi, Anhui, Jiangxi, Henan, Hubei, and Hunan; the western region (including 12 provincial-level local governments) refers to Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, and Xinjiang

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Figure 3. 2000–2009 comparison of public service of eastern, central, and western regions in China

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Figure 4. 2001–2010 comparison of public infrastructure of eastern, central, and western regions in China

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Figure 5. 2001–2010 government size comparison of eastern, central, and western regions in China

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Figure 6. 2001–2010 comparison of economic welfare of residents of eastern, central, and western regions in China

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CONCLUSIONS AND POLICY RECOMMENDATIONS

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies

In this paper, the literature review and results of the measurement analysis about the efficiency of Chinese provincial governments lead us to the following three conclusions and implications for further research and public policy.

First, it reveals a reliable methodology for measuring government efficiency, provides pointers to further quantitative research of government efficiency, and provides possible implications thereof.

Government cost and revenue are difficult to define, so quantitative research in the area of government efficiency is a recognized academic problem. However, the theory and practice of government efficiency measurement as analyzed and applied in this paper help diagnose government efficiency scientifically.

The annotation and practice of the non-parametric frontier method, the parameter frontier method, and index measurement, which are adopted in this paper, provide a methodological guide for further quantitative research of government efficiency. For example, first, according to the requirements of different measurement methods, government efficiency can be subdivided into input–output efficiency of government departments, efficiency of decision-making units, fiscal expenditure efficiency of the central or local government, the government's public service efficiency, and public affairs efficiency. Furthermore, we can assess the efficiency of government hierarchically, which helps quantify efficiency scientifically.

The contents of the government efficiency measurement in this paper enhance the feasibility and scientific value of the quantitative research of government efficiency. For example, to assess the public service category of government, we can separately measure the input and output efficiency in the fields of fundamental public services, such as education, health, public safety, and public infrastructure of the urban and rural areas, which helps improve the feasibility and rationality of the government efficiency measurement.

Secondly, it demonstrates the differences per region and regularity of government efficiency, which provides a reference for the optimization of government efficiency in China.

Measurement and analysis from this paper indicates that more developed areas such as the eastern region come top in the rank of provincial government efficiency and that less-developed areas are at the bottom. This conclusion is consistent with our real-life experience and corresponds to the research conclusion mentioned in the earlier literature review regarding public service efficiency of Chinese provincial governments: the government efficiency is high in eastern provinces and low in western provinces, which proves that population, gross domestic product per capita, foreign direct investment, and industry structure have a positive effect on local government efficiency in China. This also shows that government efficiency is an important factor in strengthening the regional economy. However, the disparity of government efficiency is strongly associated with economic development. It is similar to the Matthew effect, which led less-developed provinces to suffer more difficulties in terms of efficiency and economic development.

Through the aforementioned analysis, the following conclusions and public policy recommendations can be made:

  • First, from the comparison among eastern, central, and western regions in China, government efficiency of the eastern region, whose economic and social development level is higher, is far higher than that of the central and western regions. Government efficiency is a significant force behind economic growth and social progress, and relatively high efficiency exerts a positive influence on the local economy. At the same time, economic and social development promotes government efficiency. Therefore, in order to promote government efficiency, economic growth, social progress, international competitiveness, and overall national strength, Chinese provincial governments need to improve measurement factors of government efficiency, namely by optimizing public service and public infrastructure, appropriately controlling the size of government, and improving residents' economic welfare. This further supports the conclusion drawn by China's public financial theory research: an optimization of public financial resource allocation and an improvement of public service supply can increase local government efficiency.
  • Secondly, among the various factors influencing government efficiency, the biggest difference between the eastern region and central and western regions is caused by the economic welfare of residents, and the smallest difference lies in public service. Therefore, in order to realize social development and economic prosperity, provincial governments of the central and western regions should convert more resources to benefit livelihood, constantly improve economic welfare and living conditions of their residents, and enhance government efficiency to coordinate with economic growth. At the same time, because the public service gap between the central and western regions and the eastern region is small, they have a comparative advantage. Therefore, the central and western regions should pay more attention to the quantity and quality of the government's public goods output to optimize the economic and social development environment. The central and provincial governments should continue to optimize the investment structure of public finances and further adjust the financial transfer payment to improve the supply of basic public services in the central and western regions, thereby increasing the disposable income of local residents and improve government efficiency gradually. The central and western underdeveloped areas should focus on controlling the size of government and reducing the supply of public goods and public services costs through deepening administrative reform, thus improving government efficiency. To a certain degree, this compensates the viewpoint proposed by underdeveloped countries welfare economics and regional development theory research: the residents' economic welfare is not only the main reason for the disparity of national welfare and regional development but also the main factor influencing government management quality and efficiency.
  • Thirdly, government efficiency is an important engine for economic and social development, so it is an important indicator to measure the governing capacity of local government and the level of regional economic and social development. Government efficiency directly affects the economic and social development of local government. Therefore, to achieve a higher level of Chinese economic growth, the government should deepen its reform of the political system and establish a clean and efficient government to release more reform dividends, promote the government to improve quality of service efficiency, and promote China's economic growth continuously. This corresponds to a certain degree with the anti-corruption concept maintained by the new Chinese government and also corroborates the new research findings regarding Chinese local government efficiency, which state that corruption corrodes government efficiency and that anti-corruption is the key to improve Chinese local government efficiency (School of Government Management in Beijing Normal University, Institute of Government Management in Beijing Normal University, 2014).
  • Fourth, government efficiency enriches the theory and practice of government efficiency measurement and provides a reference point for the society at large, and other countries or regions globally, to improve the quality and efficiency of public governance.

The theory and practice of government efficiency measurement in this paper stimulate further study and promote the efficiency of public governance of the international community. On the basis of taking relevant methods that measure the efficiency of the provincial government as a lesson, we are able to start defining the contents of the efficiency measurement for public duties or public affairs during the process of assessing the efficiency of public governance in the international community and other countries or regions. We can learn from the ideas that have improved the efficiency of local government in China, which may promote the quality and efficiency of public governance in the international community by improving our ability of dealing with international public affairs, eliminating corruption, and reducing regional disparity in economic and social development.

REFERENCES

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies
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Biographies

  1. Top of page
  2. Abstract
  3. INTRODUCTION
  4. LITERATURE REVIEW
  5. THE MEASUREMENT METHOD OF GOVERNMENT EFFICIENCY
  6. INDEX MEASUREMENT SYSTEM FOR PROVINCIAL GOVERNMENT EFFICIENCY
  7. RESULTS OF CHINESE PROVINCIAL GOVERNMENT EFFICIENCY MEASUREMENT
  8. MEASUREMENT AND COMPARATIVE ANALYSIS OF THE EFFICIENCY OF CHINESE PROVINCIAL GOVERNMENTS BY REGION
  9. CONCLUSIONS AND POLICY RECOMMENDATIONS
  10. REFERENCES
  11. Biographies
  • Renwu Tang is the acting Dean and a Professor of Public Administration in the School of Government at Beijing Normal University. He also assumes the position of Dean of the Academy of Government at Beijing Normal University. He holds a PhD in Economics from the Chinese Academy of Social Science, and he specializes in globalization, history of economic thought, and public administration. He has been conducting research on Minsheng (well-being) development and government efficiency in China. He has published several books and >100 journal articles. He holds several professional positions, such as President of the Chinese Association of Economic Thought History, Vice-director of the National Steering Committee for Public Management Education, Committee Member of the National MPA Education Steering Committee, Special Allowance Holder of the State Council, Vice-president of the Board of Governors of the Chinese Enterprise Management Research Association, Vice-president of the Beijing Political Science and Public Administration Society, Deputy Editor in Chief of the Journal of Reform, and Editorial board member of the Journal of Beijing Normal University and the Journal of the Capital University of Economics and Trade.

  • Tianwei Tang is the Vice-dean and a Professor of Economics at the School of Finance at Jiangxi Normal University. He received his PhD in economics from Beijing Normal University. His research interests focus on government efficiency and industrial development.

  • Zong Lee is a postgraduate academic at the Finance School of Jiangxi Normal University.