Decentralization versus Centralization: What Ensures Food Security? Empirical Evidence from 170 Prefecture-Level Cities in China’s Major Grain-Producing Areas

Abstract

Whether fiscal decentralization will lead to agricultural land “non-grainization” has been widely debated in academic circles. How to improve the efficiency of financial support to agriculture and optimize the grain planting structure by clarifying the relationship between central and local powers and responsibilities is the key to ensuring food security. Based on the panel data of 170 cities in China from 2004 to 2017, this paper uses system moment estimation and a threshold effect model to explore the impact of fiscal decentralization on grain planting structure. The results show that (1) fiscal decentralization has a significant negative effect on the share of food crop cultivation in the major grain-producing areas. (2) Taking the wage level, financial support for agriculture, and land finance as the threshold variables, the test finds that there is a threshold effect of fiscal decentralization on the proportion of food crop cultivation, in which land finance dependence and rises in the wage level are conducive to mitigating the negative effect of fiscal decentralization on the proportion of food crop cultivation. (3) For the three major types of food crop varieties, the negative impact of fiscal decentralization on the share of wheat and corn crop cultivation is subject to the threshold effect of wage level, financial support for agriculture, and land finance, while the impact of fiscal decentralization on the share of rice crop cultivation is not significant. The results of the study have an important guiding role for the government to deepen the reform of the tax-sharing system, improve the long-term mechanism of stable growth of financial support for grain, and optimize the layout of the grain industry.

Keywords

• fiscal decentralization
• grain planting structure
• non-grainization
• major grain-producing areas
• threshold effect