Financial Support for Agriculture, Agricultural Mechanization Service and Agricultural Economic Development -- An Empirical Study Based on Provincial Panel Data

Abstract

With the rapid development of urbanization in China, rural production factors have gradually flowed to urban areas, which has exerted a negative impact on the development of agricultural economy. Government investment in agriculture and agricultural mechanization are key factors to solve the dilemma of agricultural development. Based on China's provincial panel data and PVAR model, this paper explores the relationship between financial support for agriculture (FSA), agricultural mechanization service (AM) and the development of agricultural economy (AE). The results show that that there is a long-term two-way causal and mutually promoting relationship between FSA and AE growth. The government investment in agriculture can increase AE in the short term, however, it is not effective in the long run. The effect of FSA on AE is more significant than that of AM, while the effect of FSA on AM is insufficient. It is suggested to formulate detailed plans for financial support for agriculture, strengthen agricultural land consolidation, build large farms, and optimize subsidy policies for the purchase of agricultural machinery.