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The Impact of the Subsidy Policy on Total Factor Productivity: An Empirical Analysis of China's Cotton Production

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  • Yanwen Tan
  • Jianbo Guan
  • Hamid Reza Karimi

Abstract

This paper develops one model to explore the relationship between the subsidy policy and the agricultural total factor productivity (TFP). It indicates that the agricultural TFP will be lower after the subsidy policy is implemented and there exists a negative relation between the subsidy and TFP, if subsidies are associated with the acreage. Using Malmquist index, this paper measures the changes of TFP in China's cotton production before and after the subsidy policy is implemented. The results verify that the subsidy policy could not increase but decrease the TFP of China's cotton production, not only in the whole country but also in major provinces of China. Based on the positive study, some policy implications are provided in the end of this paper.

Suggested Citation

  • Yanwen Tan & Jianbo Guan & Hamid Reza Karimi, 2013. "The Impact of the Subsidy Policy on Total Factor Productivity: An Empirical Analysis of China's Cotton Production," Mathematical Problems in Engineering, Hindawi, vol. 2013, pages 1-8, March.
    • Handle: RePEc:hin:jnlmpe:248537
    DOI: 10.1155/2013/248537
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    Cited by:

    1. Tien D. N. Ho & John K. M. Kuwornu & Takuji W. Tsusaka, 2022. "Factors Influencing Smallholder Rice Farmers’ Vulnerability to Climate Change and Variability in the Mekong Delta Region of Vietnam," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(1), pages 272-302, February.
    2. Bazyli CZYZEWSKI & Anna MATUSZCZAK, 2018. "Towards measuring political rents in agriculture: case studies of different agrarian structures in the EU," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(3), pages 101-114.
    3. You-Hua CHEN & Jun-Yi WAN & Chan WANG, 2015. "Agricultural subsidy with capacity constraints and demand elasticity," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(1), pages 39-49.
    4. Bingfei Bao & Anli Jiang & Shengtian Jin & Rui Zhang, 2021. "The Evolution and Influencing Factors of Total Factor Productivity of Grain Production Environment: Evidence from Poyang Lake Basin, China," Land, MDPI, vol. 10(6), pages 1-21, June.
    5. Cecilia ALEXANDRI & Bianca PAUNA & Corina SAMAN, 2020. "The Relationship Between Total Factor Productivity and Subsidies in the Case of Romanian Farms," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 85-98, December.
    6. 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.
    7. Kumbhakar, Subal C. & Li, Mingyang & Lien, Gudbrand, 2023. "Do subsidies matter in productivity and profitability changes?," Economic Modelling, Elsevier, vol. 123(C).

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