IDEAS home Printed from https://ideas.repec.org/a/eee/asieco/v71y2020ics1049007820301287.html
   My bibliography  Save this article

Factor reallocation and structural transformation implications of grain subsidies in China

Author

Listed:
  • Wang, Can
  • Deng, Mengzhi
  • Deng, Junfeng

Abstract

Since agriculture has contributed significantly to China’s economic growth miracle, it is important to understand the contributions and determinants of agriculture related to different agricultural policies in structural transformation in China. However, as one of the most important agricultural policies in China, the effects of the grain subsidy policy on factor reallocation, economic growth, as well as agricultural and non-agricultural production have not been investigated systematically and comprehensively. The absence of using an economy-wide model to estimate the impacts of the grain subsidy policy in China leaves a vacuum in the policy-advising space. This research develops a dynamic single-country, multi-regional computable general equilibrium model of the Chinese economy to evaluate the historical impacts of the grain subsidy policy. Our results reveal that grain subsidies impede the efficiency of factor reallocation and economic structural transformation in China. However, grain subsidies promote grain production growth and temporarily reduce rural-urban income disparity. In order to achieve the long-term sustainable increase in rural income and to mitigate the rural-urban income gap, China needs to further develop its labor-intensive industries (e.g., services) to accommodate the large number of rural labor transfers. Moreover, the large-scale agricultural production and technology improvement in agriculture are the effective measures to ensure food security in China.

Suggested Citation

  • Wang, Can & Deng, Mengzhi & Deng, Junfeng, 2020. "Factor reallocation and structural transformation implications of grain subsidies in China," Journal of Asian Economics, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:asieco:v:71:y:2020:i:c:s1049007820301287
    DOI: 10.1016/j.asieco.2020.101248
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1049007820301287
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.asieco.2020.101248?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Syrquin, Moshe, 1988. "Patterns of structural change," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 7, pages 203-273, Elsevier.
    2. Zheng Song & Kjetil Storesletten & Fabrizio Zilibotti, 2011. "Growing Like China," American Economic Review, American Economic Association, vol. 101(1), pages 196-233, February.
    3. Lin,Justin Yifu, 2009. "Economic Development and Transition," Cambridge Books, Cambridge University Press, number 9780521735513, November.
    4. Brummer, B. & Glauben, T. & Lu, W., 2006. "Policy reform and productivity change in Chinese agriculture: A distance function approach," Journal of Development Economics, Elsevier, vol. 81(1), pages 61-79, October.
    5. Lin,Justin Yifu, 2009. "Economic Development and Transition," Cambridge Books, Cambridge University Press, number 9780521514521, November.
    6. Deininger, Klaus & Jin, Songqing & Xia, Fang & Huang, Jikun, 2014. "Moving Off the Farm: Land Institutions to Facilitate Structural Transformation and Agricultural Productivity Growth in China," World Development, Elsevier, vol. 59(C), pages 505-520.
    7. LIU, Mingxing & XU, Zhigang & SU, Fubing & TAO, Ran, 2012. "Rural tax reform and the extractive capacity of local state in China," China Economic Review, Elsevier, vol. 23(1), pages 190-203.
    8. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
    9. David K. Lambert & Elliott Parker, 1998. "Productivity in Chinese Provincial Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 378-392, September.
    10. Lin, Justin Yifu & Monga, Celestin, 2010. "The growth report and new structural economics," Policy Research Working Paper Series 5336, The World Bank.
    11. Justin Yifu Lin, 2012. "The Quest for Prosperity: How Developing Economies Can Take Off," Economics Books, Princeton University Press, edition 1, volume 1, number 9812.
    12. Justin Yifu Lin, 2012. "New Structural Economics : A Framework for Rethinking Development and Policy," World Bank Publications - Books, The World Bank Group, number 2232.
    13. Cheong, Tsun Se & Wu, Yanrui, 2014. "The impacts of structural transformation and industrial upgrading on regional inequality in China," China Economic Review, Elsevier, vol. 31(C), pages 339-350.
    14. Yanjie Zhang & Bernhard Brümmer, 2011. "Productivity change and the effects of policy reform in China's agriculture since 1979," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 25(2), pages 131-150, November.
    15. Wusheng Yu & Hans G. Jensen, 2010. "China’s Agricultural Policy Transition: Impacts of Recent Reforms and Future Scenarios," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 343-368, June.
    16. Justin Yifu Lin, 1995. "Endowments, Technology, and Factor Markets: A Natural Experiment of Induced Institutional Innovation from China's Rural Reform," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 231-242.
    17. Wang, Can & Siriwardana, Mahinda & Meng, Samuel, 2019. "Effects of the Chinese arable land fallow system and land-use change on agricultural production and on the economy," Economic Modelling, Elsevier, vol. 79(C), pages 186-197.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Na Xu & Liqin Zhang & Xiyuan Leng, 2022. "Sustainable Food Production from a Labor Supply Perspective: Policies and Implications," Sustainability, MDPI, vol. 14(23), pages 1-19, November.
    2. Zhou, Yanju & Che, Yuan, 2021. "Research on Government Logistics Subsidies for Poverty Alleviation with Non-uniform Distribution of Consumers," Omega, Elsevier, vol. 104(C).
    3. Liu, Xinyue & Wang, Xiaobing & Xu, Zhigang, 2023. "The polarization and constraints of scale farming in China under the impact of rising wages," Journal of Asian Economics, Elsevier, vol. 86(C).
    4. Zhipeng Wang & Ershen Zhang & Guojun Chen, 2023. "Spatiotemporal Variation and Influencing Factors of Grain Yield in Major Grain-Producing Counties: A Comparative Study of Two Provinces from China," Land, MDPI, vol. 12(9), pages 1-30, September.
    5. Meijun Zhu & Kengcheng Zheng & Baoliu Liu & Fang Jin, 2024. "Can Agricultural Support and Protection Subsidy Policies Promote High-Quality Development of Grain Industry? A Case Study of China," Agriculture, MDPI, vol. 14(10), pages 1-22, September.
    6. Kimsanova, Barchynai & Herzfeld, Thomas, 2022. "Policy analysis with Melitz-type gravity model: Evidence from Kyrgyzstan," Journal of Asian Economics, Elsevier, vol. 80(C).
    7. Jianxu Liu & Xiaoqing Li & Shutong Liu & Sanzidur Rahman & Songsak Sriboonchitta, 2022. "Addressing Rural–Urban Income Gap in China through Farmers’ Education and Agricultural Productivity Growth via Mediation and Interaction Effects," Agriculture, MDPI, vol. 12(11), pages 1-23, November.
    8. Deping Ye & Shangsong Zhen & Wei Wang & Yunqiang Liu, 2023. "Spatial double dividend from China’s main grain-producing areas policy: total factor productivity and the net carbon effect," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-22, December.
    9. Bai, Hanyu & Irfan, Muhammad & Hao, Yu, 2022. "How does industrial transfer affect environmental quality? Evidence from China," Journal of Asian Economics, Elsevier, vol. 82(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vu, K.M., 2017. "Structural change and economic growth: Empirical evidence and policy insights from Asian economies," Structural Change and Economic Dynamics, Elsevier, vol. 41(C), pages 64-77.
    2. Seung Mo Choi & Hwagyun Kim & Xiaohan Ma, 2021. "Trade, structural transformation and growth," The World Economy, Wiley Blackwell, vol. 44(6), pages 1770-1794, June.
    3. Lin, Justin Yifu & Vu, Khuong Minh, 2014. "The practice of industrial policy: Lessons for Africa: Co-ordination through an Asian lens," WIDER Working Paper Series 156, World Institute for Development Economic Research (UNU-WIDER).
    4. Gong, Binlei, 2018. "Agricultural reforms and production in China: Changes in provincial production function and productivity in 1978–2015," Journal of Development Economics, Elsevier, vol. 132(C), pages 18-31.
    5. Lin, Justin Yifu, 2016. "Will China continue to be the engine of growth in the world," Journal of Policy Modeling, Elsevier, vol. 38(4), pages 683-692.
    6. Justin Lin, 2018. "China’s growth miracle in the context of Asian transformation," WIDER Working Paper Series 92, World Institute for Development Economic Research (UNU-WIDER).
    7. Justin Yifu Lin & Khuong Minh Vu, 2014. "The Practice of Industrial Policy - Lessons for Africa: Co-ordination Through an Asian Lens," WIDER Working Paper Series wp-2014-156, World Institute for Development Economic Research (UNU-WIDER).
    8. Justin Yifu Lin, 2018. "China's growth miracle in the context of Asian transformation," WIDER Working Paper Series wp-2018-92, World Institute for Development Economic Research (UNU-WIDER).
    9. Justin Yifu Lin, 2013. "Demystifying the Chinese Economy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(3), pages 259-268, September.
    10. Justin Yifu Lin & Yan Wang, 2014. "China-Africa Co-operation in Structural Transformation: Ideas, Opportunities, and Finances," WIDER Working Paper Series wp-2014-046, World Institute for Development Economic Research (UNU-WIDER).
    11. Lin, Justin Yifu & Wang, Yan, 2014. "China-Africa co-operation in structural transformation: Ideas, opportunities, and finances," WIDER Working Paper Series 046, World Institute for Development Economic Research (UNU-WIDER).
    12. Dairabayeva Karlygash & Carayannis Elias, 2014. "Targeted Trade-Related Policies and Manufacturing Firm Productivity in Eastern Europe and Central Asia: Effect of Corruption," Global Economy Journal, De Gruyter, vol. 14(2), pages 265-286, April.
    13. Justin Yifu Lin & Yan Wang, 2020. "Seventy Years of Economic Development: A Review from the Angle of New Structural Economics," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(4), pages 26-50, July.
    14. Wen, Yi, 2021. "China's industrial revolution: A new perspective," China Economic Review, Elsevier, vol. 69(C).
    15. Justin Yifu Lin & Wei Wang & Venite Zhaoyang Xu, 2021. "Catch‐up industrial policy and economic transition in China," The World Economy, Wiley Blackwell, vol. 44(3), pages 602-632, March.
    16. Justin Yifu Lin & Xiaobing Wang, 2019. "The Facilitating State and Economic Development: The Role of the State in New Structural Economics," Book, University of Warsaw, Faculty of Management, edition 1, volume 1, number y:2019:v:1:ch:6:p:123-141 edited by Justin Yifu Lin & Alojzy Z. Nowak, June.
    17. Lectard, Pauline & Rougier, Eric, 2018. "Can Developing Countries Gain from Defying Comparative Advantage? Distance to Comparative Advantage, Export Diversification and Sophistication, and the Dynamics of Specialization," World Development, Elsevier, vol. 102(C), pages 90-110.
    18. Razafimandimby Andrianjaka, Riana & Rougier, Eric, 2019. "“What difference does it make (to be in the Middle Income Trap)?”: An empirical exploration of the drivers of growth slowdowns," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 225-236.
    19. Justin Yifu Lin & Yan Wang, 2012. "China'S Integration With The World: Development As A Process Of Learning And Industrial Upgrading," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-33.
    20. Vu, Khuong M., 2018. "Embracing globalization to promote industrialization: Insights from the development of Singapore's petrochemicals industry," China Economic Review, Elsevier, vol. 48(C), pages 170-185.

    More about this item

    Keywords

    Factor reallocation; Structural transformation; Rural-urban income disparity; Grain subsidy policy; Computable general equilibrium model;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:71:y:2020:i:c:s1049007820301287. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/asieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.