Empirical Analysis of China’s Agricultural Total Factor Productivity and the Reform of “County Administrated by Province”: Insights from Agricultural Enterprise Data

Abstract

The study focuses on examining how the total factor productivity (TFP) of China’s agriculture-related enterprises is affected by the reform of “County Administrated by Province” (CAP). Using panel data from 1998 to 2013, with a sample size of 292, 423 agriculture-related enterprises, the study investigates the influence of CAP reform on the TFP. The findings reveal a significant dampening effect of the CAP reform on the TFP of agriculture-related enterprises. These results are further supported with a series of robustness tests including placebo test, multidimensional fixed effects test, and clustering of cities or counties. Heterogeneity analysis reveals that the CAP reform has significantly restrained the TFP of agriculture-related enterprises in high level cities, while showing no significant impact on cities with lower administrative levels. In the eastern region, the impact of the CAP reform on the TFP of agriculture-related enterprises is significantly negative, whereas it is not statistically significant in the central and western regions. the study on mechanisms elucidates that the inhibitory impact of CAP policy on the TFP of agriculture-related enterprises is enhanced by urban property prices, labor resource allocation, and banking competition. The research conclusion is of significance in guiding the practices of agriculture-related enterprises and deepening the reform of “County Administrated by Province”.