Abstract

Based on time series data from 1990 to 2016, an empirical analysis examined the factors affecting China's agricultural economic growth by developing a vector auto-regressive model (VAR), impulse response function (IRF) and variance decomposition function (VD). The results show that Chinese agriculture lacks long-term support factor. During the study period, an increase in the fixed asset investment, the total agricultural machinery power, the amount of chemical fertilizer used, and the education level of the rural labor force contributed to agricultural economic growth. However, an increase in the size of the agricultural labor force and in the total area under cultivation was not conducive to agricultural economic growth. In addition, China's agricultural economic growth was overly dependent on financial investment, while the contribution of other factors was relatively small. China's agricultural economy clearly has experienced extensive development. Hence, in the next development period, the Chinese government needs to increase agricultural fixed asset investment and strengthen its oversight. In addition, the government needs to strengthen its support of agricultural mechanization, set reasonable limits on the use of chemical fertilizers and, more importantly, focus on improvement in the quality of agricultural products and the accumulation of human capital.

Highlights

  • Agriculture is the base of the national economy and plays an indispensable role in food security and social stability

  • The vector auto-regressive model (VAR) model presented in this paper contains seven variables, which are the inputs of agricultural fixed asset investment, size of the agricultural labor force, total power of agricultural mechanization, amount of chemical fertilizers used, total sown area and educational level of rural labor together with the output of China's agricultural economy

  • We first note that the cumulative reaction of lny under the impact of lnX6 is positive but not obvious (0.023), indicating that the optimization of human capital is conducive to development of the agricultural economy, but the effect is not significant

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Summary

Introduction

Agriculture is the base of the national economy and plays an indispensable role in food security and social stability. Since the reform and opening up of its economy, China's agriculture has developed rapidly and achieved great advances These advances, obscure many problems, such as the low production efficiency and modernization, the lack of agricultural resources and disaster management capabilities, the significant decline in the agricultural labor force, and the degeneration of the ecological environment. This paper believes that the economic growth of agriculture is mainly driven by the labor force (including labor force size and human capital), material inputs (including natural resource input and capital input) and technological progress Based on this theory, the paper uses the Cobb-Douglas production function, assigns indicators to represent material inputs, labor force and technical level, respectively, and explores the relationship between these different indicators and the growth of the agricultural economy by using empirical approaches, such as stability testing, general impulse response function and variance decomposition. The purpose is to determine the dynamic characteristics of China's agricultural economic growth in recent years and to determine an effective way for China to improve sustainable agricultural development

Literature Review
Selection of Variable and DATA
Research Methods
Stationarity Test of Variables
Foundation of the Vector Autoregressive Model
Generalized Impulse Response Analysis
Variance Decomposition
Findings
Conclusions

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