Rural Industry and Rural Development in China: The Role of Geography, Transportation, and Policy in Jiangsu Province.

A significant change in China since late 1978 is the development of rural industry (also township-village enterprise, or TVE). Rural industry is particularly important in light of China\u27s current policy of socio-economic decentralization. Rural industry not only absorbs surplus labor and pushes the increases of agricultural productivity, it also revitalizes China\u27s previously lethargic economy. In this study, variations in employment, production value, and economic efficiency of rural industry are analyzed in terms of geographical, transportation and policy determinants at the county/city level of Jiangsu Province in China. Rural industry\u27s contribution to agricultural and rural welfare activities, and how levels of rural industry\u27s foreign capital and export are determined by TVE attributes, geographical attributes and domestic capital, are also addressed. Multiple regression, Tobit regression and expansion method are used in the empirical analysis. Data include 1978-1991. Empirical results include the following conclusions. (1) Rural industry has not developed at the cost of the agricultural sector. (2) High levels of domestic capital are advantageous for securing foreign capital and increasing exports for TVEs. (3) Access to water transportation is very important for rural industry, while rail transport is not as significant. (4) Being a designated city permits the greater development of rural industry. (5) There is a north-south disparity in the development of rural industry. (6) Ownership type of rural industry (private vs. collective) is insignificant in influencing how much rural enterprises contribute to rural activities, although private TVEs and all forms of TVE develop differently. (7) Open door policies are influential to the development of rural industry in participating locations. Many implications may be drawn from empirical analysis. First, spatial disparities within Jiangsu do exist due to locational and policy elements. Distinct planning policies for all forms of TVE and private TVE are called for, because they develop differently. The insignificance of the access to rail transportation reveals problems regarding the lack of complementary facilities for rail freight. Finally, because the effect of open door policies may be location-sensitive, similar results for TVEs may not be found in all of the province even if open-door type policies were introduced throughout Jiangsu