Impact of public investment on agricultural productivity growth: Evidence from China

Abstract

Based on a balanced panel dataset of 1924 counties in China from 2000 to 2021, we first evaluated the agricultural productivity using a four-component stochastic frontier model, and then employed a staggered difference-in-difference (DID) analytical framework to assess the impact of the Hundred Billion Program (HBP), a large-scale public investment in agriculture, on the growth of China's agricultural productivity. The results indicate that the HBP has a significant positive effect on agricultural productivity growth in counties where the program was implemented. Further heterogeneity analysis reveals that the HBP has predominantly positive effects on agricultural productivity growth in counties located in the Central region, as well as those with low topographic relief or low temperatures. In contrast, no significant effects were observed in counties located in the Northeastern region. Mechanism analysis suggests that public investment in agriculture not only enhances agricultural productivity by improving irrigation infrastructure and increasing agricultural machinery, but also by encouraging scaled agricultural operations. Therefore, increasing public investment in agriculture is crucial for the growth of agricultural productivity. In this regard, China's practices are worthy of emulation by other developing countries.