Financial Support For Rural Economic Development

Since the end of year 1978,China has undertaken a serial of reforms in rural economic system and achieved great development in rural economy. These reforms have reduced administrative intervention in operation of rural economy and enhanced the role of economic lever. By the hand of market, government directed agricultural production, sales and investments. However, examining the past two decades' development can show us some apparent stages in the growth pattern: a rapidly growing stage before 1984 and a fluctuated or even stagnated period then after. To explain the economic phenomenon economists have studied respectively every possible factor that might have influenced agricultural economic growth and one after one prescription has been made for consistent and healthy development of agricultural economy. Agricultural economic development can be effected by various factors, such as institutions, technology, industrial structure, price of agricultural products, factors input etc. Much more attentions have been paid for above factors and less for financial factor in all studies on the influences they may make on rural economy. Finance has become the core of modern economy. It is the financial factor that attributes to the difference of initial conditions from which China and previous Soviet began their reformations. Due to this difference the double-track gradual reformation has been successful in China while not in previous Soviet. In the procedure of China's gradual reformation many of the economists have regarded the financial system reform as 'breakthrough' to deepen China's reformation. Though it is hard to verify that rural financial reformation be the 'breakthrough' of rural economic reformation, the research of financial factor underlying rural economic development is undoubtedly of vital importance. The logic of this dissertation is as follows: based on above theories and present situation of rural economic development, the underlying relationship between rural economic development and rural financial factor will be explored and then financial policies will be suggested to promote rural economic development. According to this logic this dissertation consists of three parts that are further divided into six chapters. Part One, which comprises of the first and second chapters, mainly explores the relationship between economy and finance theoretically and then makes a further examination of the relationship between rural economic development and rural financial development from the aspects of both the characteristic of agriculture and the reality of China's rural reform. Part Two, which includes the third and fourth chapters, concentrates on some real issues of China's rural financial reformation. In order to get rid of the adverse influence the issues make on rural economic development some basic principles for promulgating rural economic development policies will be given according to the related theory of the relationship between finance and economy. Part Three includes chapter 5 and chapter 6.In this part some innovative thoughts and suggestions for making policies are to be discussed on the basis of above policy-making principles from the aspects of rural financial organization system, rural financial market and rural financial instruments etc. Chapter 1: Relationship between economy and finance. Due to the lack of specific theory to be quoted directly the relationship between rural economic development and rural financial development can only be explored under the help of related theories and characteristics of rural economic development. Therefore, this chapter, which is an extending, summarization and systemization of previous research achievements on relationship between economy and finance, aims to construct theoretical framework for explaining relationship between rural economic development and rural financial development. Using financial development theory and result of positive studies conducted by China's economists the conclusion that economic development and financial development ar...