| Since Adam Smith established market economics, the activity of public sector has been largely limited to areas such as national power, national defense, social security and foreign affairs. However, with the emergence of market defect (or the market failure), scholars have started to pay more attention to public sector's economic activities to solve issues related to market deficiency. Although Adam Smith strongly urges narrowing down the function of government public sector, the problems that can not be solved by market mechanism have to be solved by the public sector.Since World Warâ…¡, with the establishment of the mixed economy, the share of government fiscal expenditure in the nation's GDP has been continuously increasing. For example, government fiscal expenditure is more than 60% of the GDP in Sweden and other Nordic countries and about 40% in the United States, Japan and other countries. In contrast, since the economic reform started in 1978 China's fiscal expenditure as a percentage of GDP has experienced a v-shaped trajectory, with 1994 as the turning point. In 2008, China's budget expenditure reached 20.8% of the GDP. With the central government expenditure steadily rising, the size of provincial and local governments has also been continuously expanding. For example, the share of local fiscal expenditure in the central government fiscal expenditure increased from 52.6% in 1978 to 78.7% in 2008. The share of non-budgetary funds expenditure of central and local governments has changed more dramatically, rising from 59.4% in 1986 to 92.6% in 2008. Along with the increasing in the fiscal responsibility of provincial and local governments, regional difference has been increasing gradually. The coefficient of variation of per capita budget fiscal expenditure among regions was 67.9% in 1978,68.3% in 1994,74.2% in 2005, but rose to 76.7% in 2008. This regional difference in government fiscal ability inevitably leads to differences in local governments'ability of providing public products, which consequently causes differences in the efficiency of government public sector.Therefore, it is of great importance to track the changing dynamic of public sector efficiency by empirical investigating the antecedents of regional differences in public sector efficiency and analyzing the influence that such regional differences may have on regional and national economy. In recent years, scholars have proposed various hypotheses from different angles to identify factors that might contribute to regional differences in the size and efficiency of public sector. However, due to inconsistent definition of the concept "public sector", the description of related phenomenon has been unclear. In addition, because of the non-market nature of public sector activities, there is no market price for these activities. As a result, it is difficult to accurately define and measure the quality and quantity of public sector activities, in turn, it is greatly difficult to measure public sector efficiency. With the enaction of SNA (1993) Revision Work Plan in 2003, and the promulgation of SNA (2008)in 2008, the accounting standard of public sector has been established, which lays a solid foundation for the research related to public sector. Moreover, internationally, the research of the input-output measurement and quality adjustment method of the government non-market service also have received unprecedentedly enrichment and development. In contrast, research on China's public sector efficiency has mainly been limited to application of complex technologies of empirical test, for example, the DEA method. As a result, there is a lack of a comprehensive examination of issues related to the improvement of the quality of public sector data. The quality and suitability of the data used in the complex technology is of equal importance as technology itself. The defects in the data limit the development in the research on public sector to certain extent. Given this limitation of the current literature, this dissertation is aimed to answer the following questions:what is public sector is?; how to determine the border between the private sector and the public sector?; what are the alternative methods of studying the efficiency of public sector?; and what is the quality and suitability of the data source that is used in each of the alternative method?.The dissertation is organized as the follows:Chapterâ… presents the theoretical and practical significance of investigating regional differences in the efficiency of public sector. Also, following the research questions of the dissertation, the author lays out the research mainline, presents a detailed research framework, and discusses the core concept of technology efficiency and the relationship between productivity, scale economy, X efficiency and technology efficiency in the study. The last section of the chapter is a summary of the work conducted in this dissertation and suggestions for future research.Chapterâ…¡presents a review of the literature on the size and efficiency of public sector. Based on a systematic analysis of the literature, the author points out the limitations of previous studies.In Chapterâ…¢, applying the economics and national accounting perspectives, he author analyzes the underlying rational of defining the boundary between public sector and private sector, and among each department within public sector. The main section of the chapter is devoted to reviewing the issues government and other public sectors in the SNA (1993) revision. The author also deeply dissects the concept of "control" and the concept of "the price of economic significance", which are proposed in the decision tree model that SNA (2008) uses to define public sector.Chapterâ…£focuses on the issue of data sources. Many previous studies have mentioned the difficulty of measuring the output of public sector. Based on the findings of research on the measure of government output and productivity conducted by the European Union's statistics office, OECD and UK Bureau of Statistics, the author distinguishes direct output and consumption output, and deeply probes into the quality adjustment issues of output indicators. For studies on public sector efficiency, it is very important to have the correct measure and disposal for capital stock. However, the extant literature in China has neglected this issue.Chapterâ…¤discusses the measurement of technology efficiency. Based on a systematically review of the development of parameters method and nonparametric method of technology efficiency measure, the author focuses on models that are commonly used in DEA and SFA and the key issues related to the application of these models Then the author discusses of the combination of the SFA with DEA in the analysis public sector technology efficiency.In Chapterâ…¥, based on the analysis in previous chapters, the author constructs the input-output indicator system for technology efficiency measurement for China's public sector. Furthermore, the author systematically analyzes the difference in technology efficiency score of provincial public sector obtained from the DEA and SFA. Last, the author examines factors influencing regional difference in technology efficiency of provincial public sector by using the BC (1995) model.In Chapterâ…¦, using the technology efficiency score of the provincial public sector obtained from SFA in chapterâ…¥, the author constructs the provincial panel data, and studies the relationship between technology efficiency of public sector and regional economic growth. The results show that technology efficiency of provincial public sector has a positive effect on regional economic growth, but the magnitude of the effect varies across regions. Chapterâ…§presents the conclusion of the study and the author's suggestions for policy makers. The study's results suggest continuous improvements of technology efficiency of the provincial public sector, however, the results also show that regional differences in technology efficiency of provincial public sector are gradually widening. A further analysis of factors resulting in technology efficiency differences of provincial public sector shows that population density and per capita administrative management expenditure negatively and significantly influence technology efficiency of provincial public sector, while the education level of regional resident, the disposable income of regional resident and the local government scale has a positive and significant effect. Based on these results, measures such as strengthening and regulating local government to prevent excessive growth of administrative management cost of local government and controlling drastic and extended expansion of large cities will help reduce the differences in technology efficiency among regional public sectors.
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