Agricultural Productivity and Urbanization: Evidence from Grain and Tobacco Production Efficiency in China

Abstract

This paperbased on grain production efficiency and tobacco production efficiency studies the impact of agricultural productivity on urbanization in open economy. Theoretically, a theoretical model allowing biased technological progress is constructed. The research finds that when technological progress is labor-saving technological progress, the improvement of agricultural productivity can significantly improve the level of urbanization. Empirically, using The Panel data of Chinese cities from 2000 to 2014, the empirical study finds that The improvement of grain production efficiency and the improvement of tobacco as a cash crop production efficiency will significantly improve the urbanization rate, and each standard deviation increase of agricultural productivity will increase the urbanization rate by about 4-9.6 percentage points, or about 12-30%. The above findings are robust and hold even after using instrumental variables and introducing more control variables. The research of this paper shows that the improvement of staple grain production efficiency and cash crop production efficiency can effectively improve the level of urbanization in China. Under the new normal of the economy, implementing the rural revitalization strategy and continuing to improve the efficiency of agricultural production is conducive to further improving the urbanization rate and boosting high-quality economic development.