Inter-regional difference of agricultural productivity in China: Distinction between biochemical and machinery technology

The major objective of this article is to measure the inter-regional difference in agricultural productivity of China, and then to test empirically whether or not some relevant hypotheses with respect to agricultural technology are valid. The analysis shows that biochemical (BC) technological changes account for a significant part of China's agricultural production growth. This result is consistent with the fact that China's factor endowments are characterized by abundant farm labor relative to scarce arable land. Besides, in accordance with the standard theory of market failure, the benefits accruing to BC technological development are not privately appropriable. Thus, it can be hypothesized that the inter-regional difference in BC technological attainment must be closely associated with public spending in agricultural R&E activities at a local level. The random effects model reveals that the BC technological level is high in provinces where the public sectors are seriously committed to R&E activities. In addition, the analysis lends strong support to the validity of the induced innovation hypothesis with respect to M technological progress.