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Growth and poverty in rural China: the role of public investments

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Author Info
Fan, Shenggen
Zhang, Linxiu
Zhang, Xiaobo

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Abstract

Public investment, together with institutional and policy reforms, has contributed substantially to rapid economic growth in rural China since the late 1970s. This rapid growth has also led to dramatic reductions in rural poverty. In this study we use a simultaneous equations model and time-series (1978-97), cross-sectional (25 provinces) data to analyze the differential impact of different types of public investments on growth and poverty reduction in rural China. The results show that government expenditures on education have by far the largest impact on poverty reduction, and the second largest impact on production growth; it is a dominant “win-win” strategy. Government spending on agricultural research and extension has the largest impact on agricultural growth, and the third largest impact on poverty reduction. It is another win-win strategy. The next best investment is rural telecommunications, which gives the second largest impact on poverty reduction and the third largest impact on agricultural growth. The results also show that there are regional tradeoffs in achieving growth and poverty alleviation goals. If the government wishes to maximize its poverty reduction effects, then investments should be targeted to the western region. However, the sacrifice in growth by investing more in the western region is small. But, the government wishes to maximize the returns to growth in agricultural production, then it should definitely target the central region.

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Paper provided by International Food Policy Research Institute (IFPRI) in its series EPTD discussion papers with number 66.

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Date of creation: 2000
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Handle: RePEc:fpr:eptddp:66

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Keywords: Poverty China.; Public investments China.; Rural population.;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  6. Koo, Bonwoo & Wright, Brian D., 1999. "Dynamic implications of patenting for crop genetic resources:," EPTD discussion papers 51, International Food Policy Research Institute (IFPRI). [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hazell, P. B. R. & Haddad, Lawrence James, 2001. "Agricultural research and poverty reduction:," 2020 vision discussion papers 34, International Food Policy Research Institute (IFPRI). [Downloadable!]
    Other versions:
  2. Dorward, Andrew & Fan, Shenggen & Kydd, Jonathan & Lofgren, Hans & Morrison, Jamie & Poulton, Colin & Rao, Neetha & Smith, Laurence & Tchale, Hardwick & Thorat, Sukhadeo & Urey, Ian & Wobst, Peter, 2004. "Institutions and economic policies for pro-poor agricultural growth," DSGD discussion papers 15, International Food Policy Research Institute (IFPRI). [Downloadable!]
  3. Gamini Herath & Mokhtharul Wadud, 2007. "Institutional Economics Approach to Irrigation Management with Special Reference to Developing Asian Countries," Economics Series 2007_07, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance. [Downloadable!]
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    Other versions:
  5. Sumiter Broca, 2002. "Food Insecurity, Poverty and Agriculture: A Concept Paper," Working Papers 02-15, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA). [Downloadable!]
  6. Block, Paul J. & Strzepek, Kenneth & Rosegrant, Mark W. & Diao, Xinshen, 2006. "Impacts of considering climate variability on investment decisions in Ethiopia:," EPTD discussion papers 150, International Food Policy Research Institute (IFPRI). [Downloadable!]
  7. Elina Eskola, . "Improving Trade and Transport Services in Tanzania: A General Equilibrium Approach," Discussion Papers 05-22, University of Copenhagen. Department of Economics, revised Nov 2005. [Downloadable!]
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    Other versions:
  10. Nweke, Felix, 2004. "New challenges in the cassava transformation in Nigeria and Ghana:," EPTD discussion papers 118, International Food Policy Research Institute (IFPRI). [Downloadable!]
  11. Ushma D. Upadhyay, 2000. "India's New Economic Policy of 1991 and its Impact on Women's Poverty and AIDS," Feminist Economics, Taylor and Francis Journals, vol. 6(3), pages 105-122, November. [Downloadable!] (restricted)
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  15. Gruère, Guillaume P., 2006. "An analysis of trade related international regulations of genetically modified food and their effects on developing countries:," EPTD discussion papers 147, International Food Policy Research Institute (IFPRI). [Downloadable!]
  16. Thomas Gries & Magarete Redlin, 2008. "China’s provincial disparities and the determinants of provincial inequality," Working Papers 18, University of Paderborn, CIE Center for International Economics. [Downloadable!]
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