Agriculture Reference
In-Depth Information
To mpose the restrcton of constant returns to scale
(a
3
=1-a
1
-a
2
)
, both
sdes of Equaton 1 were dvded by
L
it
y
it
=A+a
1
k
it
+ a
2
h
it
+a
3
d
it
+a
5
U
i(t-1)
+a
6
DU
i(t-1)
+ε
it
(1')
where
y, k, h
and d are
Y, K, H
and
D
dvded by
L
, respectively.
To see the possble dfferences n the urbansaton effect at the dfferent
levels of economic development,
U
(
t
-1)
s replaced by three urbansaton
variables for the east, central and west regions. The east region is the
most developed whle the west regon s the least developed of the three
regions. Similarly, replacements are made to
DU
i(t-1)
.
y
it
=A+a
1
k
it
+a
2
h
it
+a
3
d
it
+a
7
U
1
i(t-1)
+a
8
U
2
i(t-1)
+a
9
U
3
i(t-1)
+a
10
DU
i(t-1)
+a
11
DU
i(t-1)
+a
12
DU
i(t-1)
+ε
it
(2)
Panel data for 25 provinces and covering the 20 years from 1979 to 1998
have been used. The other sx provnces were excluded due to ncomplete
data. Data were provided by Fang Cai and Dewen Wang (2002) and from
Natonal Bureau of Statstcs (varous years and 1999b). Captal stock was
calculated from the hstorcal data for captal formaton n each provnce.
Both fixed effects and random effects models were estimated. Haus-
mann's test rejects the hypothess of the approprateness of the random
effects model; therefore the results of the fixed effects model are reported
in Table 4.3.
The two versions of the model produce similar results. Most coefficients
are statistically significant at the 1 per cent level. According to version (1'),
the elasticities of capital, human resources, employment and land with
respect to economic growth are 0.348, 0.431, 0.205 and 0.016, respectively,
all in reasonable ranges. The elasticity of land is minor and insignificant,
whch s not surprsng because the farmng sector only contrbutes a small
proporton to the economy. The estmates of
U
are significant, which
ndcates that every one percentage pont ncrease n the urbansaton rate
accelerates provincial economic growth by 0.37 percentage points over
the 7-10 per cent high growth rate.
DU
s omtted from the model due to
