In a move that could reshape the future of infrastructure management, a recent study has cast a spotlight on the long-term impacts of privatizing Japan’s expressway companies. The research, led by Tsubasa Kaino from the Department of Innovation Science at the Institute of Science Tokyo, delves into the effects of privatization on maintenance and operational efficiency, offering insights that could influence global infrastructure trends.
The study, published in *Transport Economics and Management* (or *Transport Economics and Policy* in English), focuses on the 2005 privatization of Japan’s four public highway corporations, which birthed the three NEXCO companies. Despite remaining fully government-owned, these entities are eyeing a future stock exchange listing. Kaino’s research aims to inform this transition by analyzing management efficiency and identifying factors influencing changes.
“While initial goals of privatization were met, such as steady debt repayment and expressway construction, maintenance and operation have become increasingly important over time,” Kaino explains. The study uses data envelopment analysis (DEA) to evaluate efficiency based on management costs and toll revenue, comparing performance pre-privatization, immediately post-privatization, and 14 years later.
The findings reveal a complex picture. Network-wide efficiency showed little change immediately after privatization. However, a route-level analysis paints a different story, indicating a decline in efficiency over time. “Privatization, even in the form of a joint stock company, may have limited capacity to enhance long-term management efficiency in expressway operations,” Kaino notes.
For the energy sector, these insights are particularly relevant. As infrastructure networks become more interconnected, understanding the long-term impacts of privatization on maintenance and operational efficiency could shape investment strategies and policy decisions. The study suggests that while privatization can drive initial improvements, sustained efficiency gains require more nuanced approaches.
As governments worldwide grapple with aging infrastructure and budget constraints, Kaino’s research offers a timely reminder of the complexities involved in privatization. It underscores the need for comprehensive strategies that balance immediate gains with long-term sustainability, ensuring that infrastructure networks remain efficient, reliable, and resilient.