Abstract
The purpose of this research is to estimate the production function that contains the infrastructure related to the road (= the road capital) as a factor of production by the use of the regional industrial panel data in China, and to confirm whether the road capital increases the aggregate production exists. In addition, the stochastic frontier production function is estimated by using regional industrial panel data, and it is confirmed whether the road capital contributes to the efficiency measured.
The results of this research are as follows.
(1) It is confirmed that the road capital has a positive influence on the aggregate production by estimating the production function by the use of the regional industrial panel data.
(2) In the industrial sector, the marginal productivity of the road capital has decreased in all regions from 1995 to 2000. Moreover, in China, the marginal productivity of the road capital in the east region is higher than in other regions.
(3) It is confirmed that the road capital has a positive influence on the technical efficiency of the industrial sector in China as a result of the estimation of the stochastic frontier production function by the use of the regional panel data.
(4) The technical efficiency of the industrial sector in China has risen in various places from 1995 to 2000, while geographical inequality of the technical efficiency has been reduced.
