A Model of Evaluating State-owned Railway Companies' Reforms by Using Euclidean Distance and Data Envelopment Analysis

Abstract:The reform of state-owned railway companies is an important part of railway reforms in many countries. However, those companies' reforms are often evaluated based on experts' personal opinions or simple statistics. This article proposes a concept of Reform Index to evaluate the state-owned railway companies' reforms. The method is to create an R6 Euclidean space and measure the distance from points representing ordinary reforms to the point representing a perfect reform. The calculation of Reform Index is based on Euclidean distance and data envelopment analysis. According to the value of Reform Index, the degree of reform can be divided into five levels: very successful, successful, not obvious, failed, and completely failed. The article also uses the case of the Japanese National Railways (JNR) as an empirical study. Through the calculation of Reform Index, it not only clarifies that the degree of JNR's reform can be considered successful, but also finds the constraints to further success and proposes suggestions for improving them.