An Empirical Research On The Effect Fiscal Supports To Agriculture Have On Increasing Farmers' Income

The issues concerning agriculture, rural areas and farmers, which are briefly called the three dimensional rural issues, are big problems facing our nation and the Party after the Opening and Reforming, especially during recent years. Also they are made a top priority in the work of the whole Party. And how to increase farmers' income is the key problem of the three dimensional rural issues. As is known to us all, agriculture is the basis of national economy and at the same time the main source of farmers' income nowadays. However, the truth of slow growth of agriculture and a growing gap in income distribution shows the importance and immediacy of increasing farmers' income. Theory and practice both testified that fiscal supports or policy have huge effect on increasing farmers' income and the growth of agriculture. Therefore, the writer hopes to find out the limitations of fiscal supports to agriculture now and a more effective mode of supporting farmers by studying the effect fiscal supports to agriculture have on increasing farmers' income, provide theoretical supports and viable suggestions on the three dimensional rural issues.The first chapter of this thesis is an introduction of related research and the main idea of this thesis with research methods in it. First, it simply gives main ideas of related research on this theme and makes a brief comment about the limitations of their research. From this part we can see, different scholars have different ideas about the turns and effects on increasing farmers' income of the four sub items of fiscal expenditure. The only thing they agree on is that through their own models they all came to a conclusion that Expenditure for Supporting Agriculture Production plays an important role in increasing farmers' income. However, some research used wrong methods so that it drew wrong conclusions. Knowing this, the writer comes up with her own methods and improves the research. In respect of econometric model method, the writer uses a log-linear model to measure the effect each sub item brings to farmers' income and follows the econometric model method strictly. In respect of theory, the writer believes Expenditure for Supporting Agriculture Production didn't play an important role in increasing farmers' income, and verifies her viewpoint by her own econometric model. At the end of the chapter, the writer gives the definitions of related concepts mentioned in the thesis and makes brief introduction about the analytical methods and the source of data or materials used in the thesis.The second chapter centers on policy choices of effects fiscal supports to agriculture have on increasing farmers' income. It first discusses fiscal policies for increasing farmers' income in three aspects: In respect of the definition of rural per capita net income, fiscal policy should center on decreasing tax and fee, especially that in agriculture. In respect of fiscal support patterns, we should not only insist on increasing expenditures but also decreasing revenues, meaning to cancel some items of taxation which has high taxation costs and little effect on decreasing fiscal revenue. In respect of the classification on agricultural subsidy in Agreement on Agriculture of WTO, our nation didn't make the most of all kinds of agricultural subsidy policies. We should take full advantage of domestic support policies to increase farmers' income. Then the chapter introduces fiscal policies on agriculture of some developed countries in four aspects: perfect agricultural subsidy system, taxation on agriculture, fiscal policy with farm credit, rural infrastructure and public service, especially R&D support on agriculture. Those experiences set good examples for our nation. In the end of chapter 2, the writer summarizes the strategy on the three dimensional rural issues and fiscal policies after the Opening and Reforming.The third chapter is an empirical analysis about effect fiscal supports to agriculture have on increasing farmers' income. It is in succession discussed in gross amount and structure. In the gross-amount part, the writer first proves that fiscal policy is important to increase farmers' income. Then she analyzes the relation between fiscal expenditure on agriculture and farmers' income from 1986, makes a comparison between the growth rates of the two variables just mentioned and thereby draws a conclusion that the gross amount of fiscal expenditure on agriculture is inadequate. After that the writer does the Granger Causality Test and finds out the effect fiscal supports to agriculture have on increasing farmers' income is not obvious. The writer gives two possible explanations of this phenomenon in theory: lack of total expenditure and not fully funded projects. In the structure part, the writer observes the trends of rural per capita net income and the four sub items of fiscal expenditure on agriculture. Considering the theoretical assumption that the sub items of fiscal expenditure on agriculture play an important role in increasing farmers' income, the writer sets the modelIn NSY_i = lnβ₀ +β₁ ln NSK_2i +β₂ lnNSK_3i +β₃ lnNSK_4i + u_i. Then the writer does the tests of OLS. According to the results of the tests she gives the economic meanings as follows: Expenditure for Agriculture Capital Construction and Rural Relief Funds have great effects upon rural per capita net income and when other variables stay unchangeable, 1% increment of Expenditure for Agriculture Capital Construction approximately leads to 0.44% increment of rural per capita net income; when other variables stay unchangeable, 1% increment of Rural Relief Funds approximately leads to 0.37% increment of rural per capita net income. Science & Technology Promotion Funds to some degree hampers the increasing of farmers' income, and when other variables stay unchangeable, 1% increment of Science & Technology Promotion Funds approximately leads to 0.27% decrement of rural per capita net income. Then the writer gives explanations on this result and the cause. Especially the writer explains why Expenditure for Supporting Agriculture Production cannot be added to the model and why Science & Technology Promotion Funds have a negative effect on increasing farmers' income. According to the writer's analysis, the former is because expenses of Agriculture, Forest, Irrigation and Meteorology Department are of high proportion; the latter is because of the lack and loss of Science & Technology Promotion Funds.The fourth chapter provides suggestions according to the problems mentioned before. The suggestions are of four aspects. Firstly, increase government expenditure for agriculture. Secondly, readjust the structure of expenditure for agriculture. Thirdly, put expenditure for agriculture to a better use and improve budget control system under public finance system. Fourthly, speed up related institution construction.