A Multi-stage Malmquist-Luenberger Index to Measure Environmental Productivity in China's Iron and Steel Industry

This paper develops a multi-stage Malmquist-Luenberger index (MLPI) model by considering the joint production of desirable and undesirable outputs in multiple production processes. The proposed approach not only evaluates the environmental total factor productivity (ETFP) growth of the whole system but also investigate the progress and regress of each sub-process, i.e., the iron-making sub-process and the steel-making sub-process. Driving factors of ETFP change are identified through multi-stage MLPI decomposition. With an application of the proposed model in China's 48 iron and steel enterprises over the period of 2009-2013, the validity of the proposed models has been demonstrated. Moreover, this study explores the regional difference analysis of system and multi-stage ETFP among 31 provinces in eastern, central and western regions. Results show that the ETFP of system, iron-making sub-process and steel-making sub-process experienced increase annually, the most important finding is that the environmental efficiency increase is the most critical driving factor in promoting ETFP growth. Technical regression of steel-making sub-process is the main source of restricting system ETFP growth. In addition, the change of system ETFP varies greatly in different regions, being highest in the eastern region, and lowest in the western region. Compared with the single-stage conventional MLPI, the multi-stage MLPI is smaller and has more discriminatory power. (c) 2021 Elsevier Inc. All rights reserved.

Automated summary

This study developed a multi-stage Malmquist-Luenberger index model that considers the growth and driving factors of environmental total factor productivity in different production processes. By applying the model to Chinese iron and steel enterprises from 2009 to 2013, the validity of the model was demonstrated. Results showed that environmental efficiency improvement is the critical factor in promoting ETFP growth, while technical regression in the steel-making sub-process is the main constraint to system ETFP growth, with significant regional variations in ETFP changes.