Thesis Abstract of AGS Students

The impact of rural industrialization on farm household income in Simao country, Yunnan province

Kang Yunhai (1995)

The rapid rural industrialization which occurred in China during the 1980s is widely recognized to be an important instrument to diversify rural economy. However, there is critical development question of whether rapid rural industrialization ameliorated or aggravated existing inequalities. This thesis, based on the Simao county case in Yunnan Province, explored rural industrialization process and an impact of rural enterprises on farm household income, and farm household income distribution as well as some implications for China's rural industrialization policies in the future.

This study used detailed descriptive and quantitative analysis. Hundred and twenty farm households in three villages were selected randomly, interviewed and classified into two groups by their employment status in rural enterprises: the farm households with employment in rural enterprises (Group I) and the farm household without employment in rural enterprises (Group II).

Rural enterprise development has been a key mechanism to build rural economy and wealth during the past decade years under Chinese market-oriented economic policies. An important phenomenon is that the development of rural enterprises changed dual economy into triple economy system by adding rural enterprises to the original urban industry and traditional agriculture. A process of rural agro-industry enterprise development in Simao county has been as found an integration of producing, processing and marketing activities through "dragon head" approach. Tural agro-industry enterprise development also has been viewed as a long-term strategy for rural economic development. The analysis of sources of cash income for farm households in the three surveyed villages found that the rural enterprise sector accounted for above 75% of the non-farm income. It was also identified that cash income of rural enterprise sector contributed a major share in the non-farm income.

Differences between two groups of farm households in the three selected villages were analyzed by statistical method of t-test to explain farm household income sources and income level. It was found that an average per capital gross farm household income earned by Group I is 2418 uan higher than that of Group II; a non-farm ncome earned by Group I is 4.6 times more than that of Group II. On-farm income and off-farm income between two groups of farm households are not significantly different. This indicates that rural enterprise development is an important factor influencing the farm household income level.

Farm household income distribution was analyzed by an application of Lorenz Curve and Gini coefficients. The non-farm income Lorenz curve of Group II is further away from the egalitarian line than that of Group I. The finding has also been confirmed by Gini coefficient non-farm income, which in Group I is 0.3462 lower than in Group II. This implies that the inequality degree of non-farm income for Group I is lower than that for Group II. However, since the non-farm income in Group I represents income from the rural enterprise, whereas the non-farm income in Group II is not from rural enterprise, this result implies that the development of rural enterprises contributes toward farm household income equality.

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