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POLI 338 (20)
Juan Wang (20)

POLI 338 - Lin: Rural Reforms and Agricultural Growth

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Political Science
POLI 338
Juan Wang

Lin – Rural Reforms and Agricultural Growth in China − uses province-level data to assess contributions of decollectivization and other reforms to China's agricultural growth − the former is found to account for half of output growth during 1978- 1984 − adjustments in state procurement prices contributed by increasing input use − other reforms had very small impacts. − slowdown after 1984 analyzed − previous stagnation changed in 1978 − dramatic growth during 1978-84 as a result of market-oriented reforms − further reforms in 1985 had diminished impact, endangering future or market-oriented reforms − reforms from 78-84 include: − state procurement prices rising average of 22.1 per cent − move from collective system to individual HRS − increase of purchased inputs, such as chemical fertilizers If collective to HRS was cause of output growth, future reforms should be oriented to strengthening household farms. If this shift was detrimental to growth, recollectivization would be logical. I: Rural Reforms in China Three methods: − raising long-depressed state procurement prices for major crops − modifying management methods in collective system − increase expenditure on agricultural investments 1) Price Reform − prior to reform, there were two prices: quota price, and above-quota price − with reform, quota price increased 22.1 per cent (weighed average) − above-quota price increased 40.7 per cent − however, no price increase for grain/edible-oil products; instead, urban residents received a small subsidy − this grew to be a significant financial burden or the state − led to abolition of mandatory quotas for cotton and grain, replaced by procurement contracts (1984), supposed to be negotiated between government and farmers − result: 9.2 per cent drop in price margin paid to farmers; decline and stagnation − contracts again made mandatory in 1986 − rural market fairs also played an important role − their prices are almost always higher than above-quota prices of state − however, market price and state price do not always move in the same direction 2) Institutional Reform − in collective system, rewards to individual farmers not tied directly to their efforts, so incentive to work was very low − central government originally in 1978 saw division of collectively- owned land into individual household tracts to be opposed to socialist principles; made forbidden − despite this, localities began trying out this division anyways − the success of the individual household system forced the concession of the central government; individual household system quickly spreads − by 1983, 98 per cent of production teams had adopted HRS − “thus, the shift in the institutional structure of Chinese agriculture by and large evolved spontaneously in response to underlying economic forces” − HRS assigns collectively-owned land to individual households with contracts up to 15 years − however, idea of efficiency with large farm size is still deeply rooted in the minds of many scholars/officials, and following the 1984 stagnation, calls for recollectivization have emerged 3) Market/Planning Reform − previously, “because grain procurement prices were depressed to levels lower than prevailing market prices, the more grain an area sold to the state, in effect, the more tax it paid” − this disincentivizes the most advantaged and productive areas from raising grain output levels. − “National self-sufficiency policy thus degenerated into a policy of local self-sufficiency.” − “To increase grain output to meet state procurement quotas or local demand, local governments often expanded grain acreage at the expense of cash crops or raising cropping intensity to a level that brought net losses to farmers.” − market-oriented reforms: − increase grain imports − reduce grain procurement quotas − reduce products involved in agricultural planning − loosened r
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