Endogenous agricultural technology diffusion with factor structural changes in China

Agricultural technology diffusion and its one-way relationship with China's factor structural changes have attracted great attention in recent years. However, most of the previous studies fail to set the diffusion process endogenous to the macro economic development, and are prone to certain conceptual and estimation problems. Our research attempts to take the mutual interaction between agricultural technology diffusion and factor structural changes into account by developing a multi-stage empirical framework, and then using the simultaneous equations model to estimate this endogenous relationship with the provincial level panel data in China from 1991 to 2010. The results indicate that the factor structural changes are impacting China's agricultural technology diffusion. The increasing income of the rural residents and the spurred rural-tourban migration progress along with the technology diffusion may enable the rural residents to converge their food consumption pattern into that of their urban counterpart in the future. Moreover, this derived food consumption structural changes may also adjust the food production resulting in the acceleration of the agricultural technology diffusion.