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Capital Formation and Agricultural Growth in China

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  • Hengyun Ma

    (College of Economics and Management Henan Agricultural University 95 Wenhua Road Zhengzhou 450002 China)

  • Jikun Huang

    (Center for Chinese Agricultural Policy Chinese Academy of Sciences Institute of Geographical Sciences and Natural Resources Research Jia 11, Datun Road Anwai, Beijing 100101 China)

  • Les Oxley

    (Department of Economics University of Waikato Private Bag 3105 Hamilton, 3240 New Zealand)

Abstract

The paper considers the role and determinants of capital formation in Chinese agriculture and, in particular, the effects of capital formation on agricultural total factor productivity (TFP) growth. The results show that capital investment in agriculture by both government and farmers has risen significantly in the past two and a half decades, particularly in recent years. As China remains in the early stages of agricultural policy transition, its political economy would suggest that there will likely be more public investment in, and more subsidies to, agriculture in the coming years. Increased public investment in agriculture appears to have also induced increased farmers' capital formation in agriculture. Credit policy, the overall growth of farmer's income, rural wages, and comparative advantage of commodities are important factors that may facilitate farmers' investment in agriculture. The results also show that the successful growth of China's agriculture has been associated with its high TFP growth. Both public and private agricultural capital formations have played an important role in raising China's agricultural productivity. The TFP decomposition analyses show that technological change is a primary driver of the TFP growth in China's agriculture.

Suggested Citation

  • Hengyun Ma & Jikun Huang & Les Oxley, 2013. "Capital Formation and Agricultural Growth in China," Asian Economic Papers, MIT Press, vol. 12(1), pages 166-190, Winter/Sp.
    • Handle: RePEc:tpr:asiaec:v:12:y:2013:i:1:p:166-190
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    Cited by:

    1. Yuekai Cheng & Hongyi Li & Qi Sun & Yu Wang, 2019. "A Model of Household Savings and Alternative Investments in Rural China," Asian Economic Papers, MIT Press, vol. 18(2), pages 145-162, Summer.
    2. Blessing Ropafadzo Chigunhah & Ezekia Svotwa & Gerald Munyoro & Tendai J. Mabvure & Ignatius Govere, 2020. "Private Capital Formation Activities and Bank Credit Access Among Farmers in Zimbabwe," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 225-235.
    3. Bhanupong Nidhiprabha, 2019. "Commodity Price Cycles, the Agricultural Trap, and Thailand's Incessant Subsidies," Asian Economic Papers, MIT Press, vol. 18(2), pages 49-69, Summer.
    4. Zhu, Shu & Xu, Xin & Ren, Xiaojing & Sun, Tianhua & Oxley, Les & Rae, Allan & Ma, Hengyun, 2016. "Modeling technological bias and factor input behavior in China's wheat production sector," Economic Modelling, Elsevier, vol. 53(C), pages 245-253.
    5. Akram Khan & Md. Abdus Salam & Mohd. Farhan, 2013. "India and Genetically Modified Crops," South Asian Survey, , vol. 20(1), pages 94-113, March.

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