The Impact of the Subsidy Policy on Total Factor Productivity: An Empirical Analysis of China's Cotton Production

Abstract

This paper develops one model to explore the relationship between the subsidy policy and the agricultural total factor productivity (TFP). It indicates that the agricultural TFP will be lower after the subsidy policy is implemented and there exists a negative relation between the subsidy and TFP, if subsidies are associated with the acreage. Using Malmquist index, this paper measures the changes of TFP in China's cotton production before and after the subsidy policy is implemented. The results verify that the subsidy policy could not increase but decrease the TFP of China's cotton production, not only in the whole country but also in major provinces of China. Based on the positive study, some policy implications are provided in the end of this paper.

Agricultural subsidy with capacity constraints and demand elasticity

“…The output of labour satisfies the Cobb-Douglas production function and the total outputs equal to unit outputs of the farmland multiply land area (Tan et al 2013). Furthermore, the market clearing conditions always hold as a general assumption in other researches.…”

“…Then at the same year as the cotton subsidy has been implemented, the Chinese government drafted and announced its longstanding food security policy. As the largest developing country, China attracts more and more attention for its agricultural reform (Huang et al 2010;Yu and Jensen 2010;Du et al 2011;Anderson et al 2013;Tan et al 2013). Although agricultural subsidies have distortion effects, the evidence shows that subsidies stimulate the agricultural development, too Rizov et al (2013) issued that after the decoupling reform was implemented, the subsidies have a positive impact on the farm productivity in several EU countries.…”

“…Although agricultural subsidies have distortion effects, the evidence shows that subsidies stimulate the agricultural development, too Rizov et al (2013) issued that after the decoupling reform was implemented, the subsidies have a positive impact on the farm productivity in several EU countries. Tan et al (2013) declared that subsidies have a negative effect on the total agricultural factor productivity. However, based on the Chinese national household's survey data, Huang et al (2010) indicated that there is no evidence shown that agricultural subsidies distort the producer decisions.…”

A survey on retail sales forecasting and prediction in fashion markets

“…Results show that the model performs robustly and can successfully deal with constrains of uncertain consumer demands. Tan, Guan and Karimi (2013) proposed the relationship between the subsidy policy and the agricultural total factor productivity. And the authors provided some policy implications in the paper.…”

Clarifying Cutting and Sewing Processes with Due Windows Using an Effective Ant Colony Optimization

“…Flexible flow shop scheduling problems have been extensively studied (Demir and Leyen [7] and Xiong et al [2]). The related literature enriches this field (Pan et al [8], Costantini et al [9], Chiu et al [10], Huang et al [11], Choi [12], Hu et al [13], Shen et al [14], and Tan et al [15]). Extending previous investigations, this work develops a novel algorithm for solving such production problems, and incorporates a feasible flexible design concept that uses multimachines to relax the limitations in the two-stage flow shop scheduling problem.…”