China Infra Dong Yan PP

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Published on December 18, 2008

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Infrastructure, Growth and Poverty Reduction in China : Infrastructure, Growth and Poverty Reduction in China Institute of Comprehensive Transportation of National Development and Reform Commission April 1, 2004 Dong Yan Contents : 2 Contents 1. Institutional and Policy Framework 2. Driving Factors 3. Case Study: Impact of Transportation Infrastructure on Regional Economy and Poverty Reduction 4. Lessons Learned 5. Problems and Prospects Slide 3: 3 1. Institutional and Policy Framework Institutions involved in rural transportation and poverty reduction : 4 Institutions involved in rural transportation and poverty reduction ——The transportation administration sector ——Administration sectors for the Food for Work Program ——Poverty reduction institutes Slide 5: 5 Ministry of Communication Provincial Communication Department Prefectural Communication Bureau County Communication Bureau Provincial Development-oriented Poverty Relief Office Office of the State Council for Development-oriented Poverty Relief Prefectural Development-oriented Poverty Relief Office County Development-oriented Poverty Relief Office National Development and Reform Commission Provincial Development Planning Commission Prefectural Development Planning Commission County Development Planning Commission Township government Village committee Administration sectors for the Food for Work Program The transportation administration sector Poverty reduction institutes Rural Highways Transportation policies for poverty reduction : 6 Transportation policies for poverty reduction —— Increased investment in transportation infrastructure by Food for Work programs —— Increased investment in transportation infrastructure by financial transfers —— Poverty reduction work implemented by the transportation sector Slide 7: 7 2. Driving Factors Slide 8: 8 The first factor is the great attention the Chinese government pays to development-oriented poverty alleviation, transportation programs aimed at reducing poverty and development of rural roads. Commitment and Political Economy for Change Slide 9: 9 Development-oriented poverty alleviation ——8-7 National Poverty Reduction Program (1994-2000) —— Outline for Poverty Alleviation and Development of China’s Rural Areas (2001—2010) Transportation programs aimed at reducing poverty and development of rural roads ——Western development campaign ——Increased investment on highway construction and rural highways are one of main concerns Slide 10: 10 Table 1 The development targets of Chinese rural highways Slide 11: 11 Institutional Innovation Lack of funds is the key factor restricting the development of rural transportation. Since economic reform in the late 1970s the diversification of funds resource (including investments from governments of all levels, funds collected by the local governments, voluntary works of the farmers, domestic loans, foreign investments ) has greatly promoted the development of rural highways. Slide 12: 12 Example : Fund structure of Poverty-alleviation Road Improvement Component of the Third Henan Provincial Highway Project Loaned by the World Bank (RIPA?) Slide 13: 13 Learning and Experimentation Since 1998 Law of Highways, Law of Contract, Law of Bidding, Law of Engineering Administration and Regulations on Highway Construction Market are issued by the Chinese government. The implementation of these laws and regulations has created significant effects on protecting property right of the roads, ensuring smooth operation of the roads, strengthen administration on highway construction and promoted the development of rural highways. Slide 14: 14 External Catalysts The Chinese government has been actively working with international organizations in development-oriented poverty reduction and transportation infrastructure construction. In rural transportation construction, the international organizations play a special role both in supplying funds and in management. Slide 15: 15 3. Case Study: Impact of Transportation Infrastructure on Regional Economy and Poverty Reduction Slide 16: 16 The Poverty-alleviation Road Improvement Component of the Third Henan Provincial Highway Project Loaned by World Bank (RIPA?), started in May 2001 and ended in Dec 2002, is a subsidiary of Zhumadian-Xinyang Expressway. It consists of 10 road sections, 372KM. Total expenses were RMB 333.82 million yuan, in it WB loan RMB 106.19 million yuan. General introduction of RIPA? Slide 17: 17 Methodology Chose 6 townships as Control Zone Collect socio-economic statistics Structured interview Rural household survey Comparison analysis of Impact Zone and Control Zone Slide 18: 18 Socio-economic background of Impact Zone (IZ) and Control Zone (CZ) The Impact Zone of RIPA? includes 8 counties, 40 townships and 546 villages in Zhumadian City and Xinyang City, impoverished areas in Henan province, total population 1.809 million, total area 3508 km2. Control Zone consists of 6 townships, 2 of them in Zhumadian City and 4 in Xinyang City, total population 0.224 million , total area 561 km2. Before the implementation of RIPA? , IZ and CZ are similar in economic development level, culture, natural and geographic situations and transportation conditions. Both areas are impoverished areas with a large poor population and poor transportation conditions . After the implementation of RIPA?, the road networks of IZ are upgraded and better structured, promoting economic development of local areas. Slide 19: 19 Socio-economic impact of RIPA? The development of economy Table 2 Comparison of GDP per capita between IZ and CZ Unit: RMB yuan Slide 20: 20 The farmer’s income and poverty reduction Figure 1 Comparison of income per capita between IZ and CZ Unit: RMB yuan Slide 21: 21 Table 3 Comparison of poor population between IZ and CZ Slide 22: 22 Market construction and urbanization Table 4 Comparison of rural markets and urbanization between IZ and CZ Slide 23: 23 Rural industrialization Table 5 Comparison of rural industry between IZ and CZ Slide 24: 24 Transportation industry Table 6 Comparison of transportation industry between IZ and CZ Slide 25: 25 Tourism There are abundant tourism resources in the IZ, but the poor transportation restricted the exploitation of tourism resources in the past. After the implementation of RIPA?, the improvement of transportation greatly promoted the development of tourism, creating favorable conditions for the growth of the farmer’s income. “…Last year RIPA? reached my village. Many tourists come to visit General Xu Shiyou’s museum and tomb daily. We can sell souvenirs and food to them. The villagers become rich. We built new house outside the museum. A remote mountain village became a nice sightseeing.” ——Xu Yimin, a relative of General Xu Shiyou Slide 26: 26 Agriculture The improvement of transportation promoted the adjustment of agricultural structure. Agricultural products planted by farmers in mountain villages can be transported to cities easily and fast. The farmer’s income increased fast by planting profitable products. “In IZ we planted wheat and rice in the past. The farmers were poor. RIPA? improved the rural roads. Farmers built greenhouses and plastic sheds along both sides of roads. They planted vegetables and fruits in off-seasons. They planted flowers and precious plants to sell in the cities. They planted medical herbs to sell to the pharmacy factories. The trucks can drive into their gardens to carry the loading. The income from one mu is equal to that of 10 mu grain.…” ——Sun Xiaofeng, technician of Zhumadian Agriculture Bureau Slide 27: 27 Changes in the farmer’s ideology The improvement of transportation facilitated the travel for poor populations and their connections with outer world, therefore brought great changes in the living styles and ideology of the farmer’s. “…Now the roads are better, more people went to work in cities. They saw the citizen’s living style. Now in modern city, woman is equal to man. In the city people like girls more because girls are dearer to their parents. Going out to work in cities, girls have more chances than boys. After young people returned home village, they prefer less children and regard baby girls as good as baby boys. Now one family has at most two babies. While in the past, people born child one by one until they born a baby boy…” ——Zhang Hua, Cadre in Xinyang’s Women Federation Slide 28: 28 Better access to healthcare facilities The improvement of transportation has raised the accessibility of healthcare service and increased utilization of healthcare service of rural populations. When natural disaster happens, good transportation supplies a fast thoroughfare for the relief work, decreasing the loss to the largest extent and keeping the stability of the society. “…I opened a clinic at the roadside. RIPA? improved the transportation conditions, more people can come to my clinic. If the patient is serious, I can give him first aid treatment and sent him to the better hospital. Now it takes only 20 minutes for us to go reach the county seat…In 2003, there was a big flood in Shangcai. The RIPA? displays its power, the medical teams and medical vehicles from the province came at once. They disinfected the disaster areas and cured the patients. So no one died of epidemic diseases that year.” — —Liu Zhentang, a private rural doctor in Taqiao township, Shangcai county Slide 29: 29 Conclusions After the implementation of RIPA? the general economy, the farmer’s income, rural markets and small town construction, rural industrialization, transportation industry in Impact Zone developed or increased faster than Control Zone. The implementation of RIPA? also boosted the development of tourism and agriculture, raised accessibility of healthcare service and brought changes in the farmer’s ideology in IZ. The implementation of RIPA? has created positive impacts both on economic growth and social progress, done benefit directly to the poor population and accelerated the pace of poverty reduction in IZ. Slide 30: 30 4. Lessons Learned Slide 31: 31 The government’s role is central in Poverty-Targeted Interventions (PTI) ——Investment of the governments of all levels is the most important fund source of RIPA ——The local governments formulate preferential policies and create favorable conditions for RIPA ——The local governments pay attentions to, support and effectively organize the projects Slide 32: 32 Professional management guarantees successful implementation and sustainability of PTI Vigorous management according to related regulations and international principles is one of key reasons for the successful implementation and of RIPA. Although the investment scale of every RIPA? project is small and the construction period is short, every project, from application to completion, was implemented according to the requirement of projects loaned by the World Bank. That increased the investment benefit and ensured the sustainability of RIPA. Slide 33: 33 Funds from diversified sources ensured successful implementation of PTI The government, though the most important source of funds, is not able to afford the total investment of rural highways alone. Collecting funds from diversified sources such as loans from international financial organizations and voluntary works of the farmers is a good solution. Slide 34: 34 5. Problems and Prospects Slide 35: 35 Remaining problems Main problem is how to establish a sustainable mechanism to collect funds for the construction and maintenance of rural highways. ——Limited support from the central and provincial governments ——Most local governments have not enough financial resources to develop rural highways ——In the recent rural fees and taxes reform the farmer’s voluntary works are prohibited to be used at large scale Slide 36: 36 Prospects China still has a long way to go to reduce poverty. It has been fully proved that transportation infrastructure, especially highway infrastructure, is a fundamental factor affecting the socio-economic development of poor areas. The Chinese government is taking active steps to accelerate the construction of rural transportation infrastructure. Transportation infrastructure will continue to play an important role in economic development and poverty reduction in the future. Slide 37: 37 The end, Thanks!

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