Analysis of Technical, Pure Technical and Scale Efficiencies of Pakistan Railways Using Data Envelopment Analysis and To
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Analysis of Technical, Pure Technical and Scale Efficiencies of Pakistan Railways Using Data Envelopment Analysis and Tobit Regression Model Khalid Mehmood Alam 1 Akber Aman Shah 3
& Li
Xuemei 1 & Saranjam Baig 2 & Li Yadong 1 &
Accepted: 10 September 2020 / Published online: 8 OUctoberGO 2020 # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract Efficient railway transportation systems are very important for economic development of countries. Although extensive research has been conducted on railway efficiency in developed countries, however, such studies for developing economies in general and Pakistan is lacking. Here, we used data envelopment analysis (DEA) to evaluate the technical, pure technical and scale efficiencies of Pakistan railways from 1950 to 2016 and super efficiency model is employed to rank the efficient DMUs. This study uses seven internal factors and three externals factors to analyse efficiency. The empirical result indicates that there are five DMUs with an overall technical efficiency value of 1. The Pakistan railways operate at 86.8% level of overall technical efficiency i.e., inputs could be decreased by 13.2% without sacrificing output if all DMUs were efficient. Furthermore, the contribution of scale inefficiency in overall technical inefficiency has been observed to be smaller than what has been observed due to pure technical inefficiency (managerial inefficiency). The results of the Tobit regression model suggest that economic development and trade have positive effects on technical efficiency while the growth of highways affects it negatively as external factors. Keywords Data envelopment analysis . Overall technical efficiency . Pure technical
efficiency . Scale efficiency . Pakistan Railways . Tobit regression model
* Khalid Mehmood Alam [email protected] Saranjam Baig [email protected]
1
School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China
2
College of Economics and Political Science, Sultan Qaboos University, Muscat, Al-Khoud 123, Oman
3
Department of Business Management, Rawalpindi Women University, Rawalpindi 46000, Pakistan
990
Alam K. M. et al.
1 Introduction Railway transportation is one of the basic infrastructures of economic development. An effective railway system of the country facilitates commerce and trade, the mobility of labour-force, reduces transportation cost and economic use of natural resources. There are several reasons, which turn people on to use railway transportation instead of other facilities, such as low-cost traveling expenditures and safety (Alam et al. 2019). Pakistan Railways is providing connectivity as part of the national transport infrastructure. It has been rendering services for decades while making a continuous contribution towards the expansion of the economy by carrying goods and passengers. Pakistan Railway is a labor-intensive industry having a labor force of about more than 75, 000 persons (Railways 2017). Apart from the formal employment, Pakistan Railway
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