Research On Financial Investment In Rural Vocational Education

Rural vocational education is an important part of vocational education of China, plays an irreplaceable and important role on the economic development of China particularly in rural areas. However, the long-term abnormal development of urban-rural dual structure makes the rural vocational education and the rural economy lagged behind the development of rural economy and rural universal education, every year a large percentage of middle school students, especially rural junior high school graduates do not enter high school or drop out of school. These people do not receive vocational education, directly go into the society. To a certain extent, that affects the economic development. In 2005 and 2006, the No.1 Document of Chinese Communist Party Central Committee put forward to improving quality of workers and solving the problem of going to school of peasantry, particularly in 2007 put forward to a policy that offers 1500 yuan to the rural students studying in secondary vocational schools per year, and the students of agriculture-related majors can study for free in 2009. These policies indicate that our government increase the financial investment in rural vocational education gradually and emphasis on the development of vocational education in rural areas. These policies has profound and long-term effect, realistic significance on achieving the strategy for agricultural development by relying on science technology and education, accelerating rural industrial reconstructing, the transfer of rural surplus labors, maintaining rural social stability and implementing the "moderate prosperity" program in an all-round way.This study uses theoretical and empirical, quantitative and qualitative ways to analyze the motivation of financial investment in rural vocational education, and define the responsibilities on financial investment in vocational education of the governments at all levels, thus to improve the effectiveness of financial investment, and contribute to promoting healthy development of the vocational education and economic growth. The article begins with the analysis on "why to vote" and "how to vote" to. Mainly from the viewpoint of economics, analyzing that the main reason of the lack of requirement (enrollment difficult) on rural vocational education is due to the inadequate supply of government finance investment which induces supply and demand contradiction on educational opportunities; empirical analysis of internal effects and external effects on financial investment of education; Under the obligation of policy, define the responsibilities on financial investment in vocational education of central government and local government, meanwhile use the experience of other countries for reference, to enhance the effects of financial investment in vocational education, thus having good internal and external effects.The study is divided into seven parts. The first part is an introduction, briefly introduce the research background, significance of the issues, current research status, the relevant definition of the concept, determine the main objective of this research, a brief description of the main contents of this issue, indicate methods we used in the research, the key issues to be solved, technologies and innovations route, in order to find the logical starting point of the research topic. The second part is the theory basis of the financial investment in rural vocational education. This part is in-depth analysis of the theory of public goods, education, financial efficiency and equity theory, human capital theory and education theory of investment behavior. First, analyze property, externalities, and effective supply issues of quasi-public goods in-depth from the theoretical level of public goods in rural vocational education. Then, expound principles of financial efficiency and equity in rural vocational education from the theoretical level. Again, clarify the relationship of human capital growth rate between rural vocational education and high school education. At last, deeply dissertate the principles of behaviors of investment in rural vocational education from the theoretical level, in order to provide theoretical support for this research further more. The third part is the analysis of supply and demand of rural vocational education. First, theoretically analyze demands for rural vocational education, including personal demands of educational opportunities, social demands of educational products, demands of the school budget for education and their relationship, and also, deeply analyze the micro supply subjects - individual or family, the middle way supply-school and even the macro supply subjects - government of rural vocational education, and last, clarify the relationship between demand supply and demand in rural vocational education. Secondly, empirical analyze the individual demands, social demands, financial demands and personal supply, school supply, government supply and influential factors of rural vocational education. Finally, analyze from the theoretical and empirical level that the reason of fewer students is contradictions of supply and demand and deeply analyze contradictions of supply and demand of governmental regulation of financial subsidies. The fourth part is the effective analysis of financial investment in rural vocational education, including external effects and internal effects. External effects are mainly contributions to economic growth and the relationship between financial investment in rural vocational education and economic growth, and internal effect is mainly research of input-output effect based on DEA. First of all, take Liaoning as example, we use Denison coefficient to estimate the contributions of financial investment in rural vocational education to economic growth. Then, select panel data of GDP and financial investment in rural vocational education of Liaoning province from 2001 to 2009, and use the panel data model to analyze the effects to economic growth. In the end, we select the panel data of five districts, including eastern Liaoning, southern Liaoning, western Liaoning, northern Liaoning and central Liaoning, choose financial investment, number of teachers, educational space area as input indicators, amount of graduates and employment rate as output indicators, then use Malmquist index based on DEA to analyze the input and output of rural vocational education. The fifth part is about game analysis of financial investment in rural vocational education. Its main content is game between the central government and local government. Firstly, expound that the logical starting points of game of the government are government interests, the existing financial system and the related research of educational finance and others. Secondly, I conduct in-depth analysis of assumptions of Game’s main acts, including assumptions of rational people, of authorities of central and local governments, of themselves benefits. Thirdly, build a game model and find the solution - Game perfect Nash equilibrium. At last, try to make Regression analysis and static game analysis to find out the factors which impact the proportion of financial investment between the central government and local government. The sixth part is about the international comparative analysis of financial investment in rural vocational education. From my paper’s definition, the concept of rural vocational education is as same as the ISCED3, which is the international standard. Compare per student education budget and composite index of China with members of OECD from the perspective of quantitative analysis. Meanwhile, composite index is the ratio of per student education budget and per capita GDP. Per student education budget and per capita GDP are the most popular international indicators. Secondly, select some main developed countries like Australia, Germany, Britain and the United States to expound their sources of funding for rural vocational education, input mode and legislative conditions. In the end, we obtain the relevant worth learning experiences. The last part is mainly about the main conclusions and policy recommendations.The main conclusions of this study are as follows. First of all, rural vocational education is secondary vocational education, including general secondary, vocational education in high schools and technical schools. Vocational education has both the properties of public goods, but also has private product attributes, it is a typical quasi-public goods. Financial investment in rural vocational education follows the principles of investment behavior of investors, taking into account the principles of fairness and efficiency. Secondly, household income and individual endowments are the main reasons to affect the demands of rural vocational education. GDP per capita, annual household income of farmers, per capita disposable income of urban households, per capita revenue, local revenue per capita, second and tertiary industries accounted for the proportion of provincial GDP, the second and tertiary industries of the total employed population the proportion of the employed population and the non-agricultural population share of the total population of 8 indicators have strong impacts to social demands of rural vocational education. The extent of financial funding for rural vocational education has some connection with school-age population and level of economic development. Thirdly, household income level is the main factor to affect individual supply capacity of rural vocational education. Meanwhile, admission policies, employment policies, employment rate and status of teachers in vocational schools are the main factors to affect schools’supply of rural vocational education. And Level of economic development and financial current expenditure levels are the main factors to affect governments’supply of rural vocational education. Fourthly, government subsidies can mainly adjust contradiction between supply and demand of rural vocational education. It is to some extent improved the difficulty of rural vocational education enrollment, and promoted the healthy development of rural vocational education. Fifthly, we take Liaoning province as example and use Denison coefficient to estimate two kinds of education’s contribution to economic growth, rural vocational education is 0.545%, which is 0.327 percentage points higher than high school, by the way, high school is 0.218%. Financial investment in rural vocational education conductively prompts economic growth, especially economically backward areas. DEA-based Malmquist index of research shows that internal effect of financial investment in Liaoning’s rural vocational education is not relatively obvious. Sixthly, financial investment of local government in rural vocational education is 26.16%. Meanwhile, the game of transfer payments among local governments can also affect the proportion of local governments’ financial investment in rural vocational education. Seventhly, there is disparity in financial investment in rural vocational education between China and developed countries. We should learn from their successful experiences.In the end, we make some policy recommendations that rural vocational education should gradually take the road of compulsory education. First, governments, especially the central government, should increase the strength of financial investment. Second, implementation of financial subsidies to rural vocational education should be quality and quantity assured. Thirdly, financial investment modes in rural vocational education should be innovated. Fourthly, strengthen the supervision of financial investment in rural vocational education. Fifthly, regulate the transfer payments system of rural vocational education. Finally, establish and improve a legal system of rural vocational education.