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Positive Study on Transport Infrastructure Construction and County Economic Development in Wengniute1 YIN Peipei, LIU Yingqi School of Economics and Management, Beijing Jiaotong University, Beijing, P.R.China, 100044 [email protected] Abstract: This paper discusses the importance of transport infrastructure construction to the development of county economic development, especially the significant influence to the rural economy. Using the data from Wengniute, this paper then does some empirical study to further investigate which aspects of rural development transport infrastructure construction has the most obvious influence on. At last, this paper presents some suggestions on transport infrastructure construction according to the conclusions of empirical study. Key words: transport infrastructure construction, county economy development, Wengniute 1. Introduction A common phenomenon often exists in the social economic development: A place’s degree of richness is closely related to the degree of transport demand satisfaction level of this place. The more the demand is met, the better the economy develops, and vice versa. The reason for this is that the development of transportation in this area is directly related to the flow of funds and information, the training of qualified personnel and the use of high technology. Once the traffic infrastructure is poor, it becomes the bottleneck of development of local economy. From the perspective of economics, profitability is the aim of social investment. Sampaio, Neto and Yony Sampaio (2008) discussed the quality and efficiency of public transport through a DEA analysis, and highlighted the characteristics of the efficient systems. But according to Word Bank’s study, the commodity index of rural roads is 1, that is to say, rural road is a kind of public goods, so you can not get profits by investing in rural roads construction. What’s more, according to the road investment theory (Wengqiang Chen and Yulei Gu, 2007), the time effectiveness of urban areas is larger than rural areas, and the economic return of investing in urban areas is larger than rural areas. Therefore, our country’s traffic investment concentrates on cities and towns. The investment on railway and highway construction is huge, but county and township level roads that directly improve farmers’ transport conditions are only invested by local governments, apparently in a weak position. The empirical study done by Yanling Li in 2004 also proves this. However, as the demand for harmonious society is becoming stronger and stronger, more and more attention is paid on the constraint of transport infrastructure construction to agriculture development. Dalkmann et.al 2007 affirmed the important role of transport in the development of rural settlements and declared that the situation of Chinese villages is often worse because of an insufficient development of transport. Hao Wu had compared the transport condition with the agriculture development condition respectively in the east, west and middle part of china, his data proved that currently the west region is falling behind. And he noted that poverty covered the west region and poverty here was worst. Another investigation found that in 1994 the poverty rate of village without roads is 82.7%, 75.5% higher than that of villages with roads .Thus he pointed out the significant influence of transportation development to agriculture development. This phenomenon appears in the whole world. United States, European Union have better transport conditions, their GDP as well as the rate of commercialization of agricultural products is also the forefront; while many African countries, although richly endowed by nature, do not well developed ( ) 1 Sponsored by National Social Science Foundation of China (No.07CJY015) and College Students Innovative Experiment Plan in Beijing Jiaotong University. 704 because of the backwardness of transportation. There are mainly two points of view when it comes to the relationship between transport and economy development. One considers transport industry the driving force of economy development, transport can boost economy; the other considers transport industry flexible, and highlights the comply aspect of transport with economy. Recalling the history of transport and economic development, it can be seen that when transport adapts to the needs of economic development, it can promote it; when transport lagging behind, it has certain constraints to economy. At the same time, when the rapid development of economy brings about a large quantity of high quality transport demand, the economy will counter-influent the transport, forcing transportation change and develop rapidly to become part of the economy development process. Therefore, the basic system of modern times no longer allows the hysteresis of transportation. In particular, different scholars have done their research on the relationship between agriculture and economy development: Peigang Zhang (1984) came up with a point that infrastructure and basic industry were the vanguard of industrialization through researching the interdependence relationship between agriculture and industry, indirectly showed the effect of transport on agricultural modernization under the assumption of fixed transport technology. Fuping Yang (1996) and Lingzhong Xiao (1999) researched respectively on the effects that the circulation of agricultural products made on the commercialization of them and then further on agricultural development and the objective demand for transport. Chaohe Rong (1991) depicted the stage of agriculture development and transport development in the book ‘on transportation’; Yiping Zhao (1994) also made some comprehensive study of China’s transport and rural economy development. All showed the great effect of transport infrastructure construction on rural development. 2. Text This paper chooses one special poverty-stricken county in western region---Wengniute and does some specific studies according to the current situation of local transport development and the existing problems based on previous studies, in the hope of making practical recommendations and giving some guidance to the future development of this county. 2.1 The status quo of Wengniute An American agriculture economic development expert J.W.Mellor divided the development of agriculture into three stages: traditional agriculture stage, the transformation stage from traditional to modern agriculture and the modern agriculture stage. Traditional agriculture is characterized by small scale production, low level of specialization and ambiguity of labor division. The modern agriculture, however, has large scale production, high level of specialization, clear labor division and high rate of agricultural products commercialization. According to the 2006 evaluation report on Chinese county basic economic competitiveness, Wengniute is the 1135th one, and the level of basic competitiveness is F(in total A-J 10 levels). From the specific data[2], we can consider Wengniute in a stage of traditional agriculture, but if judging from the existing pattern of industrial development[3],this county has formed rice, animal products processing, biological chemical and other competitive industries, the 13 leading enterprises are developing organic, green and pollution-free agricultural products, and they have already realized the commercialization of agricultural products through market operating, brand packaging, scale producing and company managing. Therefore, we can believe that this county is in the transformation stage. 2 The national county average economic scale until 31st,12,2006:average population 45.53 million ,average GDP 3.204billion,average local financial revenue 121million.Wengniute statistics: population:471691,GDP 3.6724billion,local financial revenue 99.04million 3 Liu Yingqi, Wang Yakun, Study on the Selection of Leading Agriculture Industry in Ecologically Deficient and Developing Counties 705 2.2 The status quo of Wengniute transportation Wengniute is located in the middle of Chifeng City, and among the northern five counties, it is the only way to Chifeng. So it is in an very important traffic position. But due to some geographical reasons, Wengniute is the only county that mainly depends on highway and has no railway. A "three vertical and four horizontal" traffic network has formed in this region: State Road 305 line, 306 line and Province Road 205 line go from south to north; Junior line, Shengdeng line, Red line and Taiyang line go from east to west. Although compared to the past, the number has greatly improved, the levels remain to be enhanced: for there are only 334Km asphalt roads, 12.32%of all highway mileages. Until today there are still 168Km county roads to be rebuilt and 19 Sumu without asphalt roads. Therefore the existing road level can not meet the increasing traffic demand. Some roads would be blocked when it rains because of the lack of bridges. Therefore, this region's transport infrastructure is very poor and needs to be improved. Especially in the east region, the road construction is almost empty. So farming and animal husbandry products are facing serious transport problems. As the transport infrastructure in Wengniute can not support the establishment of agricultural and livestock products distribution center, the majority of the towns there are in a state of isolated island and unable to meet the demand of tourism. But as a national level poverty-stricken county, the funds for highway constructing is very limited due to the limits of local financial conditions. In the 2005 highway constructing project, only 45 million was invested, leaving a funding gap of 14.893million. 2.3 Empirical Analysis 2.3.1 Program design This paper does empirical analysis basing on 2000—2006 data from Wengniute. Highway mileage is the dependent variable, the GDP of the primary, secondary and tertiary industry, volume of goods transported, volume of goods turnover, volume of passenger transported and volume of passenger turnover are independent variables. Then judge respectively each independent variable the linear relationship intensity with the dependent variable. The coefficients obtained are called linear correlation coefficient or Pearson's correlation coefficient. The formula and primary data are as follows: r= n∑ xy − ∑ x∑ y n ∑ x 2 − (∑ x ) * n∑ y 2 − (∑ y ) 2 2 Table 1 variables from 1999--2006 Volume of Volume of Highway Primary Secondary Tertiary goods goods year mileage industry industry industry transported turnover 1999 1204 72000 30237 29158 63 5700 2000 1384 67880 34610 32390 73.4 6579 2001 1384 74340 34920 35830 77.1 6855.4 2002 1384 84952 41152 42516 79.9 7125 2003 1384 95194 40599 51371 84.81 7553.21 2004 2710 113573 63316 68262 91.12 7997.16 2005 3279 138550 78173 80083 95.2 8477 2006 3323 147800 126721 92719 101 9020 Data sources: annually statistics yearbook from Wengniute Volume of passenger transported 98 101.5 106.4 110 111.21 125.23 132 140 Volume of passenger turnover 4900 5373 6395.5 6723 6707 9329.5 9900 10493 2.3.2 variable explanations: The GDP of the primary, secondary and tertiary industry is calculated in terns of absolute price; The volume of goods or passengers transported is the actual quantity of goods or passengers delivered. They reflect the use of transport industry for the national economy and people's livelihood, so it can be used to study the scale and speed of transport industry development. 706 The volume of goods or passenger turnover is the quantity of goods or passenger delivered multiplied by relevant transport distances; the unit is ton-km or person-km, it can be used to reflect the total achievements of transportation. 2.3.3 the results of empirical analysis Table 2 correlation coefficients between independent and dependent variables Volume Volume Volume Highway Primary Secondary Tertiary of goods of goods of passenger mileage industry industry industry transported turnover transported Highway 1.00 0.96 mileage Data sources: SPSS analysis 0.90 0.96 0.89 0.89 0.96 Volume of passenger turnover 0.96 From the analysis results we can see that all |r| is higher than 0.8. Therefore, it is reasonable to judge that each independent variable is highly correlated with the dependent variable. Since the primary and tertiary industry has the same correlation coefficient with the highway mileage, so does the volume of goods transported, the volume of goods turnover and the volume of passengers transported, the volume of passenger turnover, we choose only one variable on the same relevant level to do multiple regression analysis, the multiple regression model is as follows: y = α + ∑ βi * xi + ε 、 、、 、 y represents highway mileage ,x1 x2 x3 x4 represent respectively the primary industry(PI), the secondary industry(SI) ,the volume of goods transported(VGT) and the volume of passenger turnover(VPT). The regression results are as follows: Table 3 regression statistics Regression statistics Multiple R 0.982023 R Square 0.964369 Adjusted R Square 0.916861 Standard error 267.8687 observations 8 As the adjusted R is 91.7%, so 91.7% of the highway mileage change could be explained by the multiple regression equation. So the independent variables are valid ones. Table 4 analysis of variance analysis of variance df SS MS F Significance F Regression analysis 4 5826111 1456528 20.29900569 0.01645505 Residual 3 215261 71753.65 Total 7 6041372 As can be seen from variance analysis, P equals 0.01. So it passes the significant test under the 95% confidence level, that is to say, the overall regression relationship significant. 707 Intercept PI SI VGT VPT Table 5 regression coefficient analysis Standard error t Stat P-value 1330.97 0.591811 0.59561420 0.01527 0.62707 0.57509147 0.00816 0.382796 0.72738269 29.5361 -1.41196 0.25281342 0.24335 1.95709 0.14526413 Coefficients 787.685605 0.00958066 0.00312523 -41.7037489 0.47625894 Lower 95% -3448.07135 -0.03904219 -0.02285698 -135.700903 -0.29819095 Upper95% 5023.443 0.058204 0.029107 52.2934 1.250709 The results of regression coefficient analysis indicate that all P values are greater than the given significant level 0.05, so all independent variables do not pass the test. The main reason is their multiple collinearity. It can also be seen from the correlation coefficient among the independent variables. 、 Table 6 correlation analysis among the independent variables HM PI SI VGT HM 1.00 PI 0.96 1.00 SI 0.90 0.93 1.00 VGT 0.89 0.93 0.86 1.00 VPT 0.96 0.97 0.89 0.96 VPT 1.00 3. Conclusions Transport infrastructure construction is the vanguard of rural economic development. The requirement of transferring rural surplus labor, goods and materials has brought new opportunities and challenges to the development of transport industry. Although the region's transport has had a little development, it has still caused some restraint to the development of local tourism industry, the universal level of education and the market process of agriculture and animal husbandry products. So it is an important factor of the backward of this area’s current economy. (1) The aspect of three industries’ personal flows : In view of the close relationship of transport industry with the primary, secondary and tertiary industry, the analysis of employment status quo of three industries is made. Judging from the employee ratio of the three industries in Wengniute, surplus labor is mainly absorbed by the primary industry and it is always in a stable state. The percentage is wandering at 30-60 in recent 30 years. Although the development of the secondary and tertiary industry employment scale is speeding up in recent years, there is a shortage of the employment absorption capacity, so it limits the driving force of secondary and tertiary industry to the economic development. One important reason for this is the poor traffic condition, causing difficulties of labor exporting and normal labor force flowing. In order to solve the status quo of the abnormal rural employment ratio, let surplus labor force in rural areas out and raise the value of the rural labor force, it is imperative to strengthen transportation infrastructure construction. (2) The aspect of tourism industry: Khadaroo and Seetanah(2007)found that transport infrastructure is a significant determinant of tourism inflows into a destination through a gravity framework. As transport is directly related to the volume of passenger turnover, analysis is made from the aspect of tourism industry. Wengniute is the world-famous birthplace of "Hongshan culture", and it is enjoying the reputation of "Dragon and Phoenix", the vast grass, boundless desert, original pinewood and unspoiled folkway are its unique tourism resources, constituting a unique ethnic custom and desert tourist place, so the tourism industry there has large development potential. By investing in transport infrastructure construction, making more Chinese or foreigners visit and consume here, we believe this "number one world Dragon" will definitely take off. 708 (3) The aspect of agriculture: In view of the relationship between the transport industry and the volume of goods transported, inspection is made from the aspect of agricultural products delivery. Wengniute is the epitome of terrain in northern China for the diversity, multi-level and echelon of its natural resources. The diversity of terrain determines different soil types of the whole county, also provides favorable conditions for the development of the mixture economy of agriculture and animal husbandry. So the agriculture has always been the main economic structure there. From 1978 to 2003, the GDP of agriculture started from 60.47million yuan to 1.5billion yuan in 25 years, with the average growth rate of 14.49%. The rate still reached 7.06% after deducting the impact of price index, showing a relatively rapid growth trend. However, the low degree of modernization, the lack of effective organization, operation model and the shortage of industrial chain causes the weak driving capacity of agriculture. The deeper reason for it is that the transport infrastructure construction has not solved the contradiction of agricultural production and consumption deviation. So although the products are in high quality, the circulation is poor, left alone realize the reasonable aggregation of production factors and the economy of scale. Due to the transport difficulties, the original price competitive products lose their advantages because of transport costs, so transport limits the expansion of market. At the same time, the low revenue of farmers and herdsmen also directly causes the insufficient demand that further restrain the development of other industries. Based on the above constraints and limitations that transport infrastructure has on the development of local economy, the following proposal are given: (1) Encourage and support the acceleration of transport construction at the guidance of local government. Currently the main funds for highway construction are from the country, the county is lack of matched funds and is reliable on the Ministry of National Communications. This causes a relative shortage of funds, so the standard of highway construction is low and it seriously constrains the improvement of the local transport industry. The government should provide local enterprises with more favorable environment. In this way, the position of government can eventually change from passive to positive, taking full advantage of the competition between foreign enterprises and choose the most favorable industry for local economic development, gradually form the cooperation between government and enterprises in highway construction. (2) Pay enough attention to road conservation after completion. Due to the special geographical location of this area, it is very hard to build a road. This area (especially the east) is lack of stones as it locates at the margin of a desert. Take Chuansha highway as an example, 1 million yuan is needed to construct only one kilometer. What’s more, it is particularly time consuming, seven years has past before the construction. However, as the local animal husbandry is relatively developed and many herdsmen choose to live by the road, cattle act as "on the road police" has become a very common phenomenon. This not only greatly reduces the safety of drivers (vehicles must give way for cattle, can not hurt their lives), what is more worrying is no clearance of the emissions from cattle. As cattle’s excrement and urine is weak acid, the corrosion is very serious and will greatly reduce the life span of the road and destroy many roads. Based on above considerations, we must strengthen the conservation of roads, and safeguard the fruits of highway construction. By executing large-scale livestock management, reducing the occupation and corrosion of them, we thereby effectively improve the life span and efficiency of the roads. As this county has already formed an industry scale, we will never tolerate transport to become the bottleneck of industry development. We should pay attention on the highway level while improving the accessibility. In addition, we should struggle to achieve sustainable development in transport by reconciling transport with resources and the environment. Therefore, we should put the development of local transportation in an important position, learning the principle:’ key in launching, focus on management, success in quality, improve on technology, long-term in conservation and core in policy’ from Yunnan, starting from solving ‘fund-raising difficulty, quality assurance difficulty and conservation difficulty’, carrying out practically transportation infrastructure construction in line with local conditions. 709 The government should have long-time vision so as to avoid duplication and giving up halfway wasting funds. At the same time take comprehensive control over both small town construction and poverty relief. Through raising people's awareness of the importance of traffic, the government can improve the quality of local roads, truly strengthen the exchange of goods and bring convenience to people's lives. By making advanced technology go rapidly into the whole county, Wengniute can set a good model for other west poverty-stricken and ecologically fragile areas to become rich with science and technology. In this way, we can speed up the pace of common prosperity and realize the harmonious development of the whole society. References & [1] Chen Wenqiang, Gu Yulei. On the countryside highway network plan and construction. Technology Economy in Areas of Communications,5,2007(in Chinese) [2] Dalkmann.H., Hutfilter.S., Vogelpohl.K. and Schnabel.P..2007. Sustainable mobility in rural China. Journal of Environmental Management, In Press, Corrected Proof, Available online 30 October [3] Khadaroo.J. and Seetanah.H.. The role of transport infrastructure in international tourism development: A gravity model approach. Tourism Management, In Press, Corrected Proof, Available online 8 November [4] Li Yanling. Empirical study on the demand and supply balance of China rural public goods. 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