The Role Of Rural Infrastructure Investment In Rural Economic Growth

As a developed province of China's southeastern coastal areas, ZheJiang's social and economic development has entered a post-industrialization. The relationships between industry and agriculture, urban and countryside, are coming to a major turning point. Therefore the issue of economic development in rural area, is particularly important. In recent years, ZheJiang province insists that the "san nong" is one of the most important issues for the balanced development of urban and rural area will promote economic and social progress and harmony.The relationship between infrastructure investment and economic growth has been an impressive field. Rural infrastructure investment in the "new rural areas contruction" has played a key role. However, as the level of economic development in different parts of the province is not identical, the stage and the feature of rural infrastructure investment will vary. At present, it is not very clear what effect the rural infrastructure investment has on economic development in ZheJiang rural areas. For example, how rural infrastructure investment on the growth of increasing incomes, on improvement agricultural productivity and non-agricultural productivity, and what is the return rate and the priorities of different infrastructure investment. Therefore, the systematic analysis on these issues are even more rarely.This paper anlyzes the effect of rural infrastructure investment in the growth of rural economy from both theoretical and empirical perspectives. Firstly, the paper in the theoretical analysis defines the conception and classification of rural infrastructure investment on the basis of documents reading. Secondly, the paper qualitatively descripts the situation of infrastructure investment in ZheJiang rural areas on the basis of the macro datas.The Empirical analysis contains two aspects. First, the paper anlyzes the effect of rural infrastructure investment in the growth of rural economy by using 1986-2006 time series datas of ZheJiang province. TO avoid the endogensity of variables, the paper establishes the system-equation model and respectively calculated the impact of rural infrastructure investment for agricultural productivity and the income of the farmers as well as the non-agricultural productivity. Subsequently, Granger causality test is used for a causal relationship among variables and priority order of the infrastructure investment was calculated. Second, the paper uses 58 counties panel datas of ZheJiang province, through a system equation model, to empirically analyze the effect of rural infrastructure investment in different rural regions in the growth of two rural departments, and then caculated the marginal rate of returning. At last, the paper proposes policy and recommendations for rural infrastructure investment.