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THOMAS P.
Cost of
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lationship between farm size and output indicates that in countries where
labor is relatively abundant, diseconomies typically outweigh economies of
farm size, The inverse relationship of farm size to output arises from factor
market imperfections and leads to systematic differences in inputs and outputs across farm units of different sizes. Together, these farm-size effects also
create a tendency for smaller operating units to adopt relatively labotsusing
and capital-saving technologies (Box 4-4).
TECHNOLOGICAL CHANGE IN ASIA AND SUB-SAHARAN AFRICA
Figure 9.2.
195287
140
130
120
110
100
90
80
70
1952
1957
1962
1967
1972
1977
1982
1987
Source: Lin 1990, Figure 1.0 1990 by The University of Chicago. All rights reserved. Reprinted by permission.
Note: Lin (1990) presents several estimates of changes in total factor productivity, but argues that Wen's
estimates on which this figure are based are probably the most accurate available. Furthermore, as Lin notes,
the broad patterns of change suggested by the various estimates are very similar.
301
that was tighih than the pressure on their input and transport prices), fertilizer makersn, ve diversified into less-regulated products. Moreover, farmers are applyi less manure and weeding less "because the value of their
labor in off-farm and non-foodcrop farming activities is much higher than
it was a decade ago" (Stone 1989).
Nevertheless,China's experience since 1978 is strong evidence that incentives and decentralized decision making help to expand agricultural production and to increase total factor productivity. With rural communes came
a fall in total factor productivity, followed by stagnation until 1978 when it
rose rapidly (Figure9.2), which is not surprising.Members of communes
receive remuneration according to "work points" or something similar that
is only loosely based on their contribution to the group. Incentives to work
hard and exercise initiative are few, unlike a situation where rewards are
linked directly to performance.
Contradictions in Maoist Strategies
China's leaders were committed "to serve the rural poor," and they have
seen "their future and the future of the policies they believe in as being intimately tied to the prosperity of the countryside" (Perkins and Yusuf 1985,
p. 5). However, there was an equally strong commitment to an industrial
state supporting modern military forces. This led in the 1950s to a Stalinist
development strategy, with emphasis on heavy industry, such as steel and
machinery. And that continued to be the dominant strategy until Mao's death,
despite rhetoric about "agriculture as the foundation."
Unlike the Soviet Union, China was able to implement a self-reliant strategy for agriculture that expanded output by labor-using, capital-saving technologies and minimized the flow of scarce resources into agriculture. "The
choice of a self-reliant strategy was deliberate. The government budget directly controlled nearly a third of national product, and industrialization
proceeded rapidly throughout the three decades, but these resources were
directed mainly toward the machinery and steel sectors, not agriculture"
(Perkins and Yusuf 1985, p. 194).
China's version of an "industrialization first" strategy resulted in a unique
urban bias. After rising from 12.5 to 15-4 percent in 195257,the increase
in the urban share of population to 17-9percent in 195778was slight. This
was due to a virtual ban on migration from rural to urban areas. Since then,
controls have been relaxed.6However, the ability to enforce that ban is striking evidence of the government's capacity to implement policies.
6The large reported growth of the urban population from 24r million in 1983 to 382 million in 1985 (or 38 percent of the total) is, however, misleading. In 1984 the Chinese redefined
"urban," and a large, but unknown, part of the increase results from this reclassification (Perkins
1988, p. 639).
302
share ( % )
34.4
42.4
100.0
23.2
16.9
50.5
100.0
5.6
62.1
100.0
32.3
27.4
7.9
64.7
100.0
18.3
2.3
79.4
100.0
169.8
92.6
42.1
50.3
100.0
23.2
26.7
32.6
259.3
24.8
71.7
361.4
151.7
26.1
238.0
63.8
19313 5
91.6
30.5
162.9
56.3
192125
100.0
31.6
3.6
64.7
212.5
32.2
3.3
64.5
100.0
185.0
100.0
100.0
100.0
57.0
10.4
32.6
378.5
100.0
7.4
52.0
40.6
46.4
5.5
48.1
485.8
13.4
801.6
60.6
196165
297.8
22.0
513.3
58.0
19505 5
32.3
45.1
22.6
301.6
21.1
422.5
71.4
193640
100.0
35.6
15.6
48.8
502.4
100.0
49.3
8.2
42.5
646.8
13.8
61.9
1,044.9
196669
Source: Data from Lee 1971; and T. H. Lee, "Strategies for Transferring Agricultural Surplus under Different Agricultural Situations in Taiwan" (paper prepared for the
Japan Economic Research Center Conference on Agriculture and Economic Development, Tokyo and Hakone, September 1971). The five-year periods omitted here for
brevity are included in the original sources.
Total
Sales to processors
Total
share ( 0/0)
Resource transfer
Marketed
Agricultural output
191115
Table 10.3. Intersectoral resource flows in Taiwan, 191169(millions of Taiwan dollars at 193537prices)