The Impact Of Fiscal Decentralization On Agricultural Economic Growth

Since the reform and opening,China’s financial management system has gradually changed from a highly centralized model to a decentralized model.Especially in 1994,the reform of tax distribution system marked the formalization of fiscal decentralization in China.Different from Western fiscal federalism,the distinctive feature of Chinese fiscal decentralization is the coexistence of moderate economic decentralization and high political centralization,which is considered to be a key institutional arrangement to promote the miracle of China’s rapid economic growth.But the impact of Chinese fiscal decentralization on agricultural economic growth is still controversial,especially the lack of theoretical and empirical analysis of the influence and mechanism of fiscal decentralization on agricultural economy growth.Whether from the basic role of agriculture in the national economy,the weakness of agriculture in China,or the quasi-public goods attribute of agriculture,it is of great significance to study the impact of fiscal decentralization reform on agricultural economic growth.This study helps to further improve the fiscal decentralization system,ensure food security,and promote the revitalization of rural areas.Factor endowment is the basic condition that determines agricultural economic growth,while technological progress is the original power.This study focuses on the key issue of how fiscal decentralization affects agricultural economic growth.Using the method of combining theory and demonstration,this paper analyzes the logical relationship and causality between fiscal decentralization and the evolution of agricultural factor endowment structure,agricultural technological progress bias,agricultural economic growth from two dimensions of time and space,and reveals the influence mechanism and action mechanism of fiscal decentralization on agricultural economic growth.First of all,this paper makes an empirical analysis on evolution trend of the agricultural factor endowment,the technological progress,and the agricultural economic growth under the background of fiscal decentralization.It is found that the agricultural factor endowment in China has shown a trend of capital-deepening since the tax-sharing reform,and the path of technological progress has evolved to the capital biased technological progress of saving labor and land.Secondly,taking the factor endowment as the starting point of logical analysis,this paper empirically tests the causal relationship between fiscal decentralization and the evolution of factor endowment.The results show that the finical decentralization is an important institutional motivation to promote agricultural capital-deepening in China.On the one hand,fiscal decentralization promotes the accumulation of agricultural capital by promoting fiscal expenditure and industrialization.On the other hand,it accelerates the transfer of agricultural labor force and non-agricultural transformation of agricultural land by promoting industrialization and urbanization,thus driving the factor endowment to show a clear trend of capital-deepening.From the point of view of time dimension,with the promotion of decentralization reform,its influence on the agricultural factor endowment is constantly enhanced;from the spatial dimension,the influence on the middle and west is stronger than that of the eastern region.Then,according to the theory of induced technological change,the change of the factor endowment will induce technological change.This study empirically analyzes the influence of fiscal decentralization on the bias of agricultural technological progress.It is found that fiscal decentralization significantly promotes the path of agricultural technological progress to show the capital bias of labor-and land-saving,but the effect is gradually weakened.In addition,it plays a stronger role in promoting the capital biased technological progress in the Middle and West.Finally,the effect and mechanism of financial decentralization on agricultural economic growth are empirically tested.It is found that in the period of "tax-sharing reform",capital-deepening promoted agricultural economic growth due to the relative scarcity of capital elements;however.However,with the improvement of capital-deepening,the acceleration of labor transfer,the constraints on land elements,capital deepening has a significant negative impact on agricultural economic growth.Fiscal decentralization mainly affects agricultural economic growth through two paths: capital-deepening and technological progress bias.On the one hand,fiscal decentralization restrains agricultural economic growth by promoting capital deepening.On the other hand,fiscal decentralization promotes agricultural economic growth by promoting the capital bias of technological progress,but the positive effect of technological progress bias is stronger than that of the negative effect of capital-deepening.As a results,the comprehensive effect of fiscal decentralization on agricultural economic growth is positive,and impacts on the Middle and West are much stronger.Based on the above conclusions,this study suggests: 1).Rational division of central and local agricultural financial authority and expenditure responsibility.Clearly define food security and other matters that embody the national strategy as the common affairs of the central and local governments,and appropriately improve the responsibility of central financial expenditure.Speed up the division of agricultural financial authority and expenditure responsibilities under the provincial level,and deepen the reform of "directly administrating counties by provinces".What’s more,implement the direct management of agriculture related funds by provinces over counties and Enhance the autonomy and flexibility of county government.2).Construct a long-term mechanism for the integration of agricultural funds,optimize the expenditure structure and improve the efficiency of supporting agriculture.In terms of capital scale,we should establish a dynamic adjustment investment mechanism.In terms of expenditure structure,we should steadily promote the reform of special transfer payments for agriculture-related funds to general transfer payments,and increase investment in agricultural science and technology innovation.Promote the integration of budgeting in the use of funds,and make overall arrangements for the relevant funds with the same nature and similar purposes so as to concentrate financial resources on major issues.3).Improve the adaptability of technological progress and factor endowments,adjust the development direction of agricultural technology innovation and promotion according to the dynamic changes of factor endowments,and promote the development of mandatory technological progress under the guidance of policies and induced technological progress under the upgrading of factor endowments.Last but not least,we should unblock the channels for the transfer of labor force and the return of talents to the countryside,strengthen the training of new-type professional farmers,and accelerate the economic transformation from factor-and investment-driven to innovation-driven.