Agricultural certification, market access and rural economic growth: Evidence from poverty-stricken counties in China

Abstract

Long-term economic growth in impoverished regions has been a critical research and policy concern. Smallholder farmers require access to modern marketing and commercialization channels to transition from subsistence farming and break the shackles of poverty. Agricultural certification provides an avenue to enhance the value of farm produce and eliminate market impediments. This paper examines the impact of an agricultural certification policy implemented in China on the economic growth of poor counties. A two-way fixed-effects model was utilized along with an instrumental variable approach. We find that the agricultural certification policy contributes to economic growth in these areas and that the effects are robust to various biases and endogeneity concerns. The policy fosters rural economic growth by increasing product premiums and employment opportunities. The effects are more pronounced in non-minority counties or those with greater market access. Additionally, the policy yields favorable effects on the surrounding air quality.