Impacts Of Rural Public Investment On Farmer's Private Invesing Behavior

Since Chinese reform and opening, both Chinese agriculture and agricultural economy developed extremely fast, agricultural labor productivity also improved significantly and grain food supply grandly met people's need, farmers'income have growed and farmer's life level have increased quickly. But meantime, there still exit many unsolved problems in Chinese agriculture, such as the huge income gap between rural and urban people, farmer's income grow slowly, and weak agricultural infrastructure, and agricultural public goods cannot satisfy farmers'need. To solve these problems and promote the process of industrialization and urbanization, and to create a harmonious society, Chinese government should increase agricultural public investment and make public policy to help farmers develop agricultural economy, more agricultural public investment also can induce more private investment in agricultural producing. So how public investment influence private investment and what extent public investment effect private investment are topics that so valuable and important to research.The west part of China is the poorest part in China, 80% of 30 million poorest Chinese people live in this part. We can tell the big gap between west and east, the big gap between rural area and urban area in this part. It is acknowledged that the public investment is the effective way to solve imbalance problem between country and city, west part and east part.Shaanxi province is a typical province in west China, agriculture has long history in this province and there are 23.35 million farmers live in here. Shaanxi province has complicated landform and climates, so many crops are planted here, and other provinces located in west China has same situation. So the system of rural public investment in Shaanxi province can be copied in many other provinces in west China.So we choose Shaanxi province as an example to analysis the relation between public investment and private investment will help to get a better way to shorten the gap between west and east,the gap between country and city in west China.The reason why government invest in public goods is to promote the development of economy and people's life. According to different landform, different civilization,different economy system in diffent part in China, the sam public policy will effct people's life in different way and will make different function. So the government should make different public policy in different part. It is important to analysis differet function of public policy in different province.America and European countries have developed pubic investment and research this topic from early time, so they have relatively complete and complicated public policies, public investment-benefits research method and public investment system. Especially the research of agricultural public investment began long time ago and their research involved in micro economy and macro economy, so they have complicated research system to analysis this topic. In China, this topic research started in recent decades, in detail, these topics include anglicizing survey data from rural areas or yearbook data to discuss how public investment influence economy increasing or whether these public goods investment meet farmer's production and living needs and so on. The topics related farmer's private investment include the situation, problems, and influential factors about household agricultural investment, recently, many scholars make agricultural public investment as one of influential factors. Most of these researches use general linear regression method, but this method cannot solve serious autocorrelation between time-series data, and usually neglect influences from other public polices.This paper, firstly, describe concepts and theories of public investment and private investment , and describe the development of agricultural public investment and farmer's household investment in recent three decades in our country, such as the development of government expenditure in agricultural public investment, the changing way of farmer's investing, both of them changed frequently according to reform and economy transition. And we sumerrize many developed and developing countries'success methods in rural public investment, such as government is regarded as the most important investor in public investment, and all these countries pay much more attention to the research and promotion of advanced agricultural technologies, Israel, as a developing country, spent 6% of GDP on developing agricultural technology, this is the most valuable experience we should get. We use yearbook data to summarize the development of four parts of agricultural public utilities, such as rural road, water construction, electricity, compulsory education. It is obvious that Chinese agricultural public utilities developed so quickly and can meet farmer's need.And then we use 1990-2008 Chinese time series data to make an empirical analysis about the relation between rural public investment and farmer's investment. The result said that public investment in rural roads, irrigation and electricity can encourage farmers to invet more in rural production, but the public investment in rural communication will reduce farmer's investment in rural production. We explained why these different part of rural public investmen has different function in farmer's investment. Take Shaanxi Province as an example, I summarize the development of rural public investment during past two decades in Shaanxi Province, and then process survey data from 8 countries in different part of Shaanxi Province, about 130 farmer household, to analysis what extent rural public investment influence household investment, and concluded that rural communication development, contry road building and rural public education development have positive influence on household investment behavior.There is a problem that general linear regression method will cause multicollinearity problem, then cannot ignore the correlation of various factors and induce analytical error, this method cannot explain this topic successfully. So this paper use principal component analysis to solve this problem, and then another problem exit, PCA use one factor represent a range of factors without relation, this also will induce misunderstanding of the analytical results. So this paper proposed Supervised Classification-based Principal Component Analysis, this method divided all factors to several parts according to their characteristics firstly, hen use PCA in different parts and get several principal components, make these principal components as independent variables and use general linear regression to analysis explanatory variable, at last get parameter from original regression model. The conclusion of Supervised Classification-based Principal Component Analysis has big difference from other method is that rural road has negative influence on farmer's household investment, this can be explained that developing rural roads will bring more opportunities to farmers to work in urban areas, so more developed rural road, less farmers invest in agricultural production.At last, this paper choose three different provinces which can represent east, middle and west part of China as example, to analysis the difference of rural public investment's influence on farmer's investment in these three provinces. I choose Kalman filter to analysis changes of rural public investment's influence on farmer's agricultural production investment according to different areas , time changing and big social events or new government policies, the conclusion showed that both most farmer labor flaw to cities from 1990 and"New rural construction"policy make the influence changed obviously. So we should make different public investment policies in different areas according to this detailed analysis.