Capital Transfer or Cash Transfer: Path Analysis of Chinese Industry Precision Poverty Alleviation and Its Policy Simulation

Li Zhiping

doi:doi:10.16538/j.cnki.jfe.2017.04.006

Abstract

How to incorporate the production activities of poor households into industry poverty alleviation in social industrial systems has been the key form and one of main objectives concerning global poverty alleviation work. In China, there are mainly two new paths to industry poverty alleviation:one is GTP path (transferring capital such as piglet, chicken and seeds to poor households and directly incorporating the production of poor households into local industry systems); the other is GSP path (the poverty alleviation funds will be converted into cash and the poor households will decide investment projects and select the industries invested on their own). This paper builds a micro subject behavior model including poor and non-poor households and rural welfare model based on rural fairness and efficiency, and studies dynamic evolution processes of the welfare of poor households and rural areas in terms of these new paths respectively. Then it makes the policy simulation by using system dynamics model to explore the optimal path to industry poverty alleviation and its supportive policy space. It shows that within three or four years, GSP path is optimal than GTP path, but after more than four years, the welfare of poor households and rural areas in GTP path would progressively exceed GSP path. Moreover, longer implementation of GTP path leads to better effectiveness of poverty alleviation. During a period of ten years, the increase in technology level and initial capital of poor households can further improve the welfare of poor households and rural areas in GTP path. The conclusions have some certain policy implications for the increase in theoretical confidence of precision porverty alleviation and further perfection of industry precision porerty alleviation policy system in China.