Catch Up or Fall Behind on Eco-Efficiency: Insight from Convergence Analysis

Abstract

Eco-efficiency plays a crucial role in evaluating the green development of economics. Using the super slack-based measure approach, which considers carbon emissions and three kinds of industrial waste as undesirable outputs, this study examines the eco-efficiency of 48 cities in the Bohai Rim from year 2005 to 2015. Eco-efficiency exhibites a pattern of polarized disparity, with observable increase regional difference. Nonlinear time-varying factor and dynamic panel models are used to analyze the evolution and convergence of eco-efficiency. Analysis of club convergence revealed that the Bohai Rim area is divided into five groups by values and yearly changes of eco-efficiency. The analysis revealed that two groups show strong eco-efficiency and obvious growth paths, while the eco-efficiencies for the other three groups are weak, with stagnant growth paths. The results confirm the existence of relative ß convergence through ordinary least squares and generalized methods of moments, and suggest that economic growth, foreign direct investment and fiscal decentralization have positive influences on eco-efficiency, while the development of secondary industry has negative effects on eco-efficiency.