A Study On Fiscal Support For Leading Enterprises Of Agricultural Industrialization: Its Effect On The Growth Of Peasants' Incomes

In the course of the agricultural industrialization, the leading enterprises of agricultural industrialization, which is one of the main actors, has shown a great amount of vitality and laid a solid micro foundation of building new countries and promoting harmonious societies. In recent years, finance funds increased continuously on supporting the leading enterprises of agricultural industrialization, and also perfected on its means. An in-depth study of fiscal support on leading enterprises of agricultural industrialization carries great theoretical and practical significance, however, the existing researches done from an economic analysis point of view are rare, and also lack of the systematic study from the perspective of increasing farmers' incomes. As a result, this paper takes the game theory and econometric as its main tools, applying with the first-hand information, carries out an in-depth study on fiscal support for leading enterprises of agricultural industrialization—its effect on the growth of farmers' incomes and the behaviors of its main players, aiming to provide policy recommendations on how finance funds supported for leading enterprises of agricultural industrialization can play a better role in raising farmers' incomes.In accordance with the idea of "Why support for - how to support - Why is so", this paper firstly demonstrates the argument and the purpose of fiscal support for leading enterprises of agricultural industrialization, and based on the summary of the history and the status quo, the effect of fiscal support for leading enterprises of agricultural industrialization on the growth of peasants' incomes is carries from econometric analysis and case analysis, and than the impacting factors from the perspective of the behavior of government and enterprise are analyzed, at last, conclusions and recommendations is derived. The main conclusion of the study is as follows:First, the fiscal support for leading enterprises of agricultural industrialization is based on the foundation of economic theory and reality. It is necessary to support leading enterprises of agricultural industrialization from the view of the theory of the transaction costs, institutional change, growth pole and public goods, as well as the reality of the government's finance, enterprise's self-development and the international situation and so on.Second, the ultimate goal of financial support for leading enterprises of agricultural industrialization is to increase the incomes of farmers through the development and expansion of leading enterprises, and this goal has achieved in some degree which is proved by the empirical study of the effect of fiscal support for leading enterprises of agricultural industrialization on the growth of peasants' incomes in Liaoning Province. The results show that financial support promotes the growth of the enterprises, and at the same time it plays a positive role in leading farmers to increase incomes at the same time, both through the econometric analysis that applies macro- data collected from financial and statistical system, and the case study that applies micro-data collected from the field research. In another word, the effect of fiscal support for Leading Enterprises of Agricultural Industrialization on the growth of peasants' incomes is positive.Third, through the case study of FD fruit and vegetable company, we found that the effect of fiscal support for leading enterprises of agricultural industrialization on the growth of peasants' incomes is also positive. Despite the effect of fiscal support for leading enterprises of agricultural industrialization on the growth of peasants' incomes is positive, many problems still exist in the financial support for leading enterprises, especially those problems that local counterpart funds are not full, enterprises has not used the fiscal funds fully in accordance with the provisions, as well as the participation of farmers on the issue of fiscal support for Leading Enterprises of Agricultural Industrialization is low and so on have negative impacts on the effect of fiscal support for Leading Enterprises of Agricultural Industrialization on the growth of peasants' incomes.Fourth, for the government to achieve the target goal of increasing farmers' incomes through fiscal support for leading enterprises of agricultural industrialization, it depends on the interaction and matchmaking among game players, rather than by the policy makers' "wishful thinking". In other words, when government supports leading enterprises, the possible reaction from the local government and leading enterprises must be taken into account, because they will continue to adjust its expected return so as to choose the behavior to maximize of their own interests.Fifth, because of the interest inconsistency of all game parties, local governments have two strategies of "full implementation" and "discount implementation" to choose in the game with the central government. In order to curb the "discount implementation" of local government effectively, it is necessary to increase the punishment to the "discount implementation" players, reduce the earnings of the "discount implementation" of local government and aggravate the penalties to the staffs of the central government who neglect their duties.Sixth, rent-seeking, asymmetric information and short-term goals are those factors that influence the government on its decisions of industrialization projects of fiscal support for agricultural enterprises. Because of the existence of rent-seeking, asymmetric information and short-term goal, the efficiency of fiscal support for Leading Enterprises of Agricultural Industrialization is cutting down, in other words, the government has chosen the wrong target to support with a certain probability. As a result, government should keep the rent-seeking with bounds, strengthen the government's grasp of the enterprises' information in various channels, and take long-term goals into the evaluation of the government's performance, therefore to enhance the effect of fiscal support for leading enterprises of agricultural industrialization on the growth of farmers' incomes.Seventh, the leading enterprises who receive the financial support have the responsibility of the leading role to increase farmers' incomes, however, whether rational leading enterprises to fulfill the responsibility that increase farmers' incomes, depends on the comparison of the expected earnings of fulfilling the responsibility and the expected earnings of no-fulfilling the responsibility, only when the former is bigger than the latter, the enterprise could choose to meet its obligations. When the supervising probability of supervision department is lower, the penalty of no-fulfilling the responsibility of the leading enterprises is lighter, the earning of no-fulfilling the responsibility but not been investigated is larger and the earning of fulfilling obligations of enterprises is lower, the leading enterprises often choose not to carry out the responsibility of driving farmers' incomes to increase.Eighth, in reality, leading enterprises may influence government's monitoring through rent-seeking, so as to obtain improper benefits and erode the financial funds jointly. The rent-seeking behavior broke the previous balance of monitor game between the government and enterprises. Game analysis revealed that the way of reducing the amount of rent obtaining from successful rent-seeking, increasing the loss of failure to rent-seeking, and raising the cost of rent-seeking and the earning of the enterprises when it do not seek rent, all these are contributive to restraining the rent-seeking and the supervision department will be able to prevent rent-seeking behavior with a smaller supervising probability; the way of reducing the cost of investigating of supervision department, increasing the penalties for rent-seeking enterprises, and improving the award of supervision department when it refused to rent-seeking behavior will be able to increase the supervising probability in order to contain the tendency of not fulfilling the responsibility of increasing farmers' incomes.Based on the theoretical and empirical analyses, the policy suggestions to enhance the effect of fiscal support for leading enterprises of agricultural industrialization on the growth of farmers' incomes are given as: to establish stable growth mechanism of fiscal support for leading enterprises of agricultural industrialization; to improve the institution of fiscal support for leading enterprises of agricultural industrialization; to strengthen the management of the industrialization project funds; to display the important role of government in the benefit joint mechanism between leading enterprises and fanners.