| This paper tests the hypotheses that grain self-sufficiency policies and fiscal decentralization result in inefficiency in grain production in China. Households supply grain in order to comply with self-sufficiency policies rather than to maximize profits. This raises the possibility that grain production is inefficient - especially where the opportunity costs are high (Turner, Brandt, and Rozelle). In addition, fiscal decentralization results in inefficiency in low-income provinces where the small A multiple output distance function is used to derive expressions for a stochastic production frontier and economic inefficiency. Provincial level data for grain and rural industrial output are used in the analysis and local fiscal expenditures and... |
