Evaluating the Effect of Fiscal Support for Agriculture on Three-Industry Integration in Rural China

Jing Li, Haoyang Liu and Wei-Yew Chang ()
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Jing Li: School of Economics, Lanzhou University, Lanzhou 730000, China
Haoyang Liu: School of Economics, Lanzhou University, Lanzhou 730000, China
Wei-Yew Chang: School of Economics, Lanzhou University, Lanzhou 730000, China

Agriculture, 2024, vol. 14, issue 6, 1-19

Abstract: The integration of the primary, secondary, and tertiary industries in rural areas, known as three-industry integration, is a crucial strategy for developing rural industries and implementing the rural revitalization initiative in China. The government’s fiscal support for agriculture serves as a cornerstone for the sustainable development of agriculture and rural regions. This study investigates the mechanisms through which fiscal support for agriculture facilitates the integration of the rural three-industry sectors by driving industrial innovation, enhancing the circulation of production factors, and optimizing resource utilization in rural areas. Using panel data from 30 provinces in China spanning from 2008 to 2020, we evaluate the level of three-industry integration in rural areas using an entropy method and analyze the effects of fiscal support for agriculture on this integration. Our findings reveal that: (1) fiscal support for agriculture significantly promotes the incorporated development of rural three-industry integration in China by acting as a catalyst for horizontal and vertical integration; (2) fiscal support enhances rural infrastructure quality, fosters market connectivity, and attracts business clusters, while also optimizing factor markets and facilitating the efficient allocation of land, finance, and resources, thereby enabling new business entities, such as leading enterprises, to benefit from economies of scale and to expand the rural industrial value chain; (3) the effects of fiscal support for agriculture exhibit significant regional and agricultural development heterogeneity, with Central China and major agricultural provinces demonstrating the most pronounced role in promoting rural three-industry integration.

Keywords: three-industry integration; fiscal support for agriculture; infrastructure development; land transfer; financial resource allocation (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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