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Impacts of great western development on agricultural production in the west of China Liu, Ge


Great western development is a regional and preferential reform which began in the mid-1990s, and which intends to promote China's western economy. In this study, I statistically measure the effects of agricultural input growth, technological improvements and most importantly the improvement in institutional efficiency, which is attributed to great western development. This measurement is pursued by first discussing general aspects of Chinese agriculture, including a brief history of China's agricultural economy and politics as well as agricultural policy changes after the reforms. In order to estimate the effects of great western development on the Chinese agricultural production, I use the stochastic frontier production function. This approach is used widely in the field of economics in areas of measuring technical efficiency and policy effects in an industry with random shocks. I accompany this approach with several economic theories such as maximum likelihood estimation (MLE), measurement of technical inefficiency and estimation of technical change in the production function. An important contribution of this thesis is empirical estimation of stochastic frontier production function for great western development and a hypothesis test using the Monte-Carlo method. By maximum likelihood estimation with respect to the stochastic frontier production function, the measurement of the efficiency improvement is produced for the west and the east of China before and after great western development, respectively. A conclusion, made after the empirical analysis, is that great western development has positive effects on agricultural production and productivity in the western China.

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