Property rights and rural development in China's transitional economy

This paper undertakes an empirical examination of the impact of the property rights system on agricultural growth in China's rural development. A model is developed, considering a conditional convergence hypothesis and control variables that capture the effect of property rights system, such as sown area, entrepreneurship and secondary school enrollment. Empirical testing is conducted under the error components method, using pooled cross-section (prefecture) and time-series data for the Shandong, Henan and Sichuan provinces. The empirical findings for the period 1994-2000 indicate that the initially less-developed prefectures tend to catch up with the initially more-developed prefectures through a more rapid growth rate in the Shandong, Henan and Sichuan provinces. The control variable of sown area affects agricultural growth in rural areas, whilst the effect of entrepreneurship on rural development is controversial. Small-scale household farming has limited the role of technological innovation in Chinese agricultural growth, thus, secondary school enrolment is less important for agricultural growth.