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Market liberalization and crop planting decision: a case of China

Author

Listed:
  • Suwen Pan
  • Jaime Malaga
  • Xiurong He

Abstract

Purpose - The paper aims to measure the effects of market liberalization on Chinese farmers' crop planting decisions. Design/methodology/approach - The effects are measured using a censored, two-stage, least-square regression. Findings - The results show that the effects of market liberalization on planting decisions are more significant in the case of crops with minimum support price (rice, wheat, and corn) than in the case of crops where planting decision is determined by market prices (cotton and soybean). The effects appear to be different across regions and time zones and more significant in 1993 than in 2005. Originality/value - The result suggests that market liberalization along the past ten years achieved significant effects in Chinese farmers planting decision. This outcome should be taken into consideration when evaluating and implementing future Chinese agricultural policy income-based interventions as a means to meet domestic food security goals and increase farmers' income level.

Suggested Citation

  • Suwen Pan & Jaime Malaga & Xiurong He, 2010. "Market liberalization and crop planting decision: a case of China," China Agricultural Economic Review, Emerald Group Publishing, vol. 2(3), pages 240-250, September.
  • Handle: RePEc:eme:caerpp:v:2:y:2010:i:3:p:240-250
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    References listed on IDEAS

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    1. Cheng Fang & Bruce A. Babcock, 2003. "China's Cotton Policy and the Impact of China's WTO Accession and Bt Cotton Adoption on the Chinese and U.S. Cotton Sectors," Center for Agricultural and Rural Development (CARD) Publications 03-wp322, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    3. Steven T. Yen & Biing-Hwan Lin, 2006. "A Sample Selection Approach to Censored Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 742-749.
    4. Chen, Zhuo & Huffman, Wallace E. & Rozelle, Scott, 2009. "Farm technology and technical efficiency: Evidence from four regions in China," China Economic Review, Elsevier, vol. 20(2), pages 153-161, June.
    5. Wang, Zhi, 1997. "The Impact of China and Taiwan Joining the World Trade Organization on U.S. and World Agricultural Trade: A Computable General Equilibrium Analysis," Technical Bulletins 184382, United States Department of Agriculture, Economic Research Service.
    6. Huang, Jikun & Chen, Chunlai, 1999. "Effects of Trade Liberalization on Agriculture in China: Commodity Aspects," Working Papers 32665, United Nations Centre for Alleviation of Poverty Through Secondary Crops' Development in Asia and the Pacific (CAPSA).
    7. Harald Tauchmann, 2005. "Efficiency of two-step estimators for censored systems of equations: Shonkwiler and Yen reconsidered," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 367-374.
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    Cited by:

    1. Abid Hussain & Golam Rasul & Bidhubhusan Mahapatra & Sabarnee Tuladhar, 2016. "Household food security in the face of climate change in the Hindu-Kush Himalayan region," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(5), pages 921-937, October.
    2. Jin-Tao Zhan & Yan-Rui Wu & Xiao-Hui Zhang & Zhang-Yue Zhou, 2012. "Why do farmers quit from grain production in China? Causes and implications," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(3), pages 342-362, August.

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    Keywords

    Free trade; China; Crops; Supply and demand;

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