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The financial support effect of china rural public goods

Author(s): Chen Wenjun, Yuan Huaiyu, Wu Shangyu

By applying the concept of location quotient and introducing the strength of financial support for rural public product (RFI) index, the financial support for public goods in rural areas was studied in three aspects of financial support, investment support and fiscal agriculture expenditure. In general, the three are constantly strengthening their support to China rural public goods. The analysis on welfare effects of the above financial support shows that the financial support, such as rural fixed assets investment and rural public expenditure, has a significant promoting effect on rural economic development. And more, the fiscal expenditure has a greater impact on agriculture than any other. But the agricultural loans from financial institutions has no significant affect on improving rural economic growth and reducing rural poverty, so the commercial support for rural public product is limited. It is suggested that the effective means of improving the main supply of public goods in rural areas are as follows: to establish a public products supply system in which power and responsibility are well defined; to adjust the function orientation of rural financial institutions; to let government funding give full play to its basic role; to establish the financing mechanism of rural public products market.

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