How to Maintain Sustainable Development of China’s Agriculture under the Restriction of Production Resources? Research with Respect to the Effect on Output of the Substitution of Input Factors

Abstract

China agricultural development has been facing the problem of resource constraints because its resources per capita such as land and energy are relatively lower than the global average. By applying the provincial agricultural panel data from 2000 to 2015 and fixed effect model based on the translog production function, this paper estimates both output elasticities and substitution elasticities of agricultural inputs, which may provide insights into sustainable agricultural development. The results show that, except for capital, the output elasticities of other production factors are all positive. Energy has always played an important role in agricultural production, whose elasticity in agriculture increased from 0.0203 in 2000 to 0.1694 in 2015. We also find a severe scarcity of land, and the high intensity of energy in the field of agriculture. Moreover, there exists a substitute relationship between all factors, which means that in the short term, one production factor can be employed to replace another to maintain agricultural development. From the empirical results of this paper, some policy suggestions are proposed as follows: it is crucial that more attention should be placed on land and to plan energy use wisely. In addition, on account of the current situation in China, the input of labor force should be stepped up and energy should be used more efficiently to make up for the shortage of land resources. The empirical results and policy suggestions in this paper may benefit the sustainable development of China’s agricultural economy.