Academic journal article Canadian Social Science

A Study on Income-Distribution Regulatory Effect of Financial Support in Agriculture

Academic journal article Canadian Social Science

A Study on Income-Distribution Regulatory Effect of Financial Support in Agriculture

Article excerpt

Abstract

This thesis carries out a quantitative inspection about marginal scale effect and structural effect that both size and structure of expenditures for financial support in agriculture have on income gap between urban and rural residents. According to analyses, it is found that both absolute amount and relative amount of size of financial support in agriculture have widening effect on income gap between urban and rural residents; agricultural infrastructure, three items of agricultural science and rural relief have gap-reducing effect; support for agricultural production and operating expenses of departments do not have significant effect, which may have widening effect in combination with reality factors; and unreasonable structure is a key factor leading to the situation that regulatory effect of financial support in agriculture on unfair income distribution is minor. Thus, to improve income-distribution regulatory effect of financial support in agriculture, it is essential to increase scale of expenditures, form a long-term mechanism, enhance degree of capital integration, optimize expenditure structure and perfect mechanisms of governmental performance examination.

Key words: Income gap between urban and rural residents; Financial support in agriculture; Income-distribution effect

(ProQuest: ... denotes formulae omitted.)

1. PROPOSING PROBLEMS AND PRESENTING LITERATURE REVIEW

Economic growth and income distribution are two eternal themes for economics, i.e., the problem about 'efficiency' and 'fairness'. With establishment of New China, especially at the beginning of Reform and Opening-up, pursuit for macroeconomic 'efficiency' becomes a strategic focus of the Party and the country. Strategic policies like 'giving priority to the development of heavy industry', 'giving priority to efficiency and taking count of equity simultaneously' and 'taking economic construction as the central task' explain the degree to which Chinese development attaches to 'efficiency' well. From 1978 to 2011, total GDP of China was RMB 47,000 billion, China surpassed Japan successfully and became the second economic entity in the world, and annual average economic growth reached up to 9%. Thus, it is clear that 'efficiency' of economic development obtained amazing achievements in China. However, with rapid macroeconomic development, some underlying problems begin to appear and become obstacles hindering continuous and healthy development of social economy. As marketization deepens constantly, achievements of economic growth are not shared by all people fairly, which causes more and more serious income inequality (Wang, 2012) and enlarges gaps among regions and between cities and countryside gradually. Per capital income rate of urban and rural residents was improved from 2.57 in 1978 to 3.13 in 2011, and it also shows an increasingly widened trend. If medical security, medical security, difference in educational input and invisible welfare that urban and rural residents can enjoy are counted, the gap may be 6:1 at most (Zhang, 2003). Thus, it is shown that inequity of income distribution has become a major obstacle affecting overall situation of social harmonious development. As the Reform enters 'an abyssal region', the most severe and the most urgent problem that we face with lies in how to promote equitable distribution of incomes and shorten income gap among residents, especially between urban and rural residents.

Researches on income gap have had a long history. In the 'inverted-U hypothesis' proposed by Kuznets an American economist (1955), income gap implements 'inverted-U' curvilinear motion that it expands and then shrinks with level of a country's economic growth, and the income gap shows different states as stages of a country's economic development vary. However, according to experience, it seems that the income gap in China does not have such a relationship with economic growth. The reason for this is that market economy of China has not been perfect or element resources cannot flow freely. …

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