Can development of large scale agricultural business entities improve agricultural total factor productivity in China?: an empirical analysis

Abstract

Large scale agricultural business entities (hereinafter referred to as “the large scale entities”) are newly sprouted in the process of China’s agricultural transformation from traditional production to modern mode, while the improvement of agricultural total factor productivity is an important driving force to realize agricultural transformation in China. Therefore, it is of great significance to explore whether the former has a promoting effect on the latter. First of all, the effective improvement of agricultural total factor productivity by the large scale entity development is analyzed from the two aspects of scale effect and technology utilization effect, and the effect mechanism is discussed in depth in this paper. Secondly, empirical test was carried out by using the panel data of prefecture-level cities from 2015 to 2020. The benchmark regression results show that the development of large scale entities can significantly improve agricultural total factor productivity. The mechanism test results indicate that the development of large scale entities improves the agricultural total factor productivity by raising the agricultural mechanization level. The results of heterogeneity analysis show that the difference between large scale entities would affect the benchmarking results. Therefore, it is believed through the study as discussed in this paper that devoting greater effort to support the development of large scale entities is an important measure to improve agricultural total factor productivity and promote China’s agricultural transformation, but it is necessary to act according to local conditions based on the difference of entity types in the process.