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Do China’s Modern Agricultural Demonstration Zones work? Evidence from agricultural products processing companies

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  • Changlin Zeng
  • Leng Yu

Abstract

This paper examines the effect of place-based agricultural industry policy on firm-level development, focusing on the establishment of Modern Agricultural Demonstration Zones (MADZ) in China. Using a panel data of agricultural products processing companies from 2007 to 2013, we apply difference in difference (DID) method and find that the policy has significantly increased the employment, output and assets. The government’s selection of MADZ may not be random, leading to endogenous problems. We deal with this selection bias on site and strengthen our estimation results with a series of robustness tests. Based on the mechanism analysis, the effect of MADZ comes from tax deductions and agglomeration effects. In addition, we use the data of listed companies to verify the role of MADZ in promoting the total factor productivity (TFP) of agricultural companies.

Suggested Citation

  • Changlin Zeng & Leng Yu, 2022. "Do China’s Modern Agricultural Demonstration Zones work? Evidence from agricultural products processing companies," Applied Economics, Taylor & Francis Journals, vol. 54(37), pages 4310-4323, August.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:37:p:4310-4323
    DOI: 10.1080/00036846.2022.2030044
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    Cited by:

    1. Nannan Wang & Dengfeng Cui, 2023. "Impact of demonstration zone policy on agricultural science and technology innovation: evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    2. Pei Xu & Zehu Jin & Huan Tang, 2022. "Influence Paths and Spillover Effects of Agricultural Agglomeration on Agricultural Green Development," Sustainability, MDPI, vol. 14(10), pages 1-16, May.
    3. Peisen LIU & Shiqi Chen & Yufeng XIA, 2023. "The Effect of Bank Competition and Rural Banks on Wages: Evidence from Agricultural Firms," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 5-24, December.
    4. Yongna Zou & Qingping Cheng & Hanyu Jin & Xuefu Pu, 2023. "Evaluation of Green Agricultural Development and Its Influencing Factors under the Framework of Sustainable Development Goals: Case Study of Lincang City, an Underdeveloped Mountainous Region of China," Sustainability, MDPI, vol. 15(15), pages 1-22, August.
    5. 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.

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