Efficiency evaluation of Chinese regional industrial systems using a dynamic two-stage DEA approach

Industrial air pollution control recently becomes a major policy issue in China. Performnce evaluation can examine policy effectiveness and provide decesion support for industrial development. A regional industrial system in China contains production and abatement stages. Within this structure, the capacity of industrial waste gas treatment can be treated as a carry-over variable. More precisely, it is a desirable output of the abatement stage in the previous period but an input to the abatement stage in the current period. Using this framework, this study establishes a dynamic two-stage data envelopment analysis model to explore the efficiencies of regional industrial systems in China. This model provides measures of the overall, period, stage, and period stage efficiencies. Based on empirical data from 2007 to 2015, it is concluded that (1) the carry-over variable capacity of industrial waste gas treatment has significant influences on the operational efficiency scores of regional industrial systems, especially in the abatement stage; (2) there exist distinct geographic characteristics of inefficiencies in the regional industrial systems; (3) the average period efficiency of the abatement stage was lower than that of the production stage during China's 11th Five-Year Plan period (2006–2010); however, the reverse happens during the 12th Five-Year Plan period (2011–2015); and 4) industrial structure and economic development level are the key influencing factors of regional industrial efficiencies. This study entails important implications for policy makers in terms of industrial waste gas treatment and revelant contextual factors.