Research On The Impact Effect Of Incentive Policies For Major Grain-producing Counties On Farmers’ Income And Economic Development

Food security is the most essential issue for a country.Along with the new pneumonia epidemic,geopolitical and trade frictions and a series of profound changes in non-market factors,the order of trade in the agricultural market has been severely challenged.It has become an important strategic choice to ensure national food security and even economic security by guaranteeing stable food production,building a solid foundation of capacity for stable and high food production,ensuring a safe and reliable food supply in the main production areas,and strengthening the "two positive aspects" of farmers’ food cultivation and local governments’ grasp of food.Between 2005 and 2021,the proportion of grain production in China’s 13 major grain-producing regions rose from 73.2 per cent to 78.5 per cent.This corresponds to a decline in the share of gross domestic product(GDP)of China’s 13 grain-producing regions from 53.4% to 52.51% of national GDP between 2005 and 2021,and the absolute difference between the per capita disposable income of rural residents in the main grain-producing regions and the per capita disposable income of rural residents nationwide has widened from 164.5 yuan to 654.9 yuan between 2005 and 2021.As we enter a new era and stand at the intersection of the "two hundred years",achieving common prosperity is an essential requirement of socialism with Chinese characteristics,and increasing the income of farmers and regional economic development is the key to achieving common prosperity.In this context,how to achieve increased production and income for grain farmers,and how to promote high-quality economic development in the main grain-producing regions and ensure national food security in a coordinated manner are important issues of the times that need to be resolved.In practice,in order to build a long-term mechanism for increasing grain production and farmers’ income,break the deep-rooted conflicts that restrict agricultural and rural development,and alleviate the financial difficulties of counties and townships in major grain-producing areas,the "No.1 Document" of the Central Government in 2005 requested the relevant ministries and commissions to use the central government to provide incentives and subsidies to major grain-producing counties.Subsequently,in April 2005,the Ministry of Finance promulgated the "Central Financial Incentives for Large Grain-Producing Counties",deciding to implement the incentive policy for large grain-producing counties and to provide incentives for grain production through transfer payments to alleviate the financial difficulties of large grain-producing counties and to ensure national food security.Accordingly,on the basis of constructing a mathematical model for theoretical analysis,this paper uses annual panel data of 1482 counties in China from 2000 to 2019,considers the incentive policy for major grain-producing counties implemented since 2005 as a quasi-natural experiment,and employs a spatial regression discontinuity analysis framework(Spatial Regression Discontinuity Design.SRDD)to examine the specific effects,heterogeneity,and their potential mechanisms of action of the incentive policy for major grain-producing counties on farmers’ income increase and county economic development.The study found that.First,overall,the incentive policy has a significant contribution to farmers’ income,with the per capita disposable income of rural residents in large grain-producing counties being 6.90% higher than that of non-grain-producing counties;however,the policy does not have a significant impact on county economic development in the award-winning regions.Secondly,heterogeneity analysis showed that the policy could significantly improve county economic development in relatively poor and backward areas.Third,local governments’ improvement of agricultural production conditions,the supply of productive public goods and the supply of educational public goods through fiscal expenditure are the mechanisms of action for the effects of the policy on farmers’ income and county economic development in poor and backward regions.Fourthly,the policy has an important function of incentivizing local governments to grasp grain production on the whole,but fails to effectively alleviate the pressure on the fiscal balance of local governments in large grain-producing counties;in addition,the incentive for officials to be promoted has a significant positive moderating effect on the county economic development effect of the policy,but weakens the grain production increase effect of the policy.Fifthly,as a central fiscal transfer policy,the incentive policy for large grain-producing counties can,to a certain extent,alleviate the problem of insufficient public investment by local finances in counties in inter-provincial border areas,and promote the economic development of border counties by combining balance with incentive while motivating local governments to grasp grain production.Finally,based on a spatial breakpoint regression analysis framework,this paper identifies the impact of grain production on economic development through two-stage least squares(2SLS)by using the incentive policy for large grain-producing counties as an instrumental variable for grain production,and the results show that a stable increase in grain production is conducive to improving the economic development of counties.This highlights the importance of food security to the quality development of China’s economy.Compared with the existing literature,the possible research contributions of this paper are:First,in terms of theoretical analysis,based on the realistic requirement of moving towards common prosperity,food production and incentive policies are incorporated into the traditional government competition model and fiscal transfer model to explain the role of incentive policies on farmers’ income increase and county economic development.Second,in terms of identification strategy,a spatial breakpoint regression design is used for the first time to analyze the impact of incentive policies on farmers’ income increase and county economic development.The experimental and control groups are constructed using administrative division boundary lines to compare the differences between the per capita disposable income of rural residents and the annual average nighttime light intensity of administrative centers in districts and counties on the left and right sides of the administrative division boundary lines adjacent to large grain-producing counties,overcoming the problem of estimation bias arising from the possible omission of important explanatory variables in previous studies and improving the reliability of the estimation results in this paper.Thirdly,the study enriches the relevant research on agricultural policies in terms of research content.The existing literature on agricultural policies has mainly focused on agricultural production,farmers’ income,international trade and environmental protection.In this paper,while assessing the impact of incentive policies on farmers’ income,we also examine how incentive policies affect regional economic development.On this basis,heterogeneity analysis is used to examine the role of the policy in driving the economic development of poor and backward regions and narrowing the regional development gap.The research in this paper is conducive to deepening the understanding of the function of agricultural policies in supporting local economic development,and providing effective policy insights for further improving agricultural policies and financial and taxation policies related to agriculture,ensuring food security and achieving common prosperity.