Does Urban Proximity Enhance Technical Efficiency in Agriculture? Evidence from China

This paper assesses whether cities enhance technical efficiency of nearby rural counties, by allowing for heterogeneous urban effects both by regions and by city type. An empirical application is demonstrated using the Chinese county-level agricultural data from 2005 to 2009. Cities are found to produce very significant spread effects on counties in Coastal provinces. Yet, spread effects are less significant in Central regions and not significant at all in the less developed regions of Western China. In addition, urban effects also vary across the urban hierarchy as we found that provincial-level cities have a deteriorating impact on technical efficiency, while lower-level cities enhance technical efficiency in most regions. Implications of these findings in terms of urban and regional planning are discussed.