Institutional reforms and dynamics of agriculture growth in China
...ountry’s capacity to import raw materials for industrialization highly depends on agricultural growth. 3) Agricultural goods were the main source of raw materials for many industries such as textile and food-processing so it was important for economic growth. - The government adopts a strategy which the resources would not compromise in the agricultural and industrial sector, the core of this included: 1) Mass mobilization of rural labor to work on labor-intensive investment projects, i.e. irrigation, flood control 2) Promoting tradition methods and inputs to improve unit yields. - The ‘collectivization of agriculture’ is developed: 1) Landlord’s land was confiscated and redistributed to tenants. 2) ‘People communes’ (consisted of 5000 households) were formed in the fall of 1958. The modification of the collective farming system - The agricultural crisis in 1959-61 caused death of many people and a more realistic approach on agriculture was adopted. - Operations were divided to and managed by smaller ‘production teams’ (20-30 neighboring households): 1) Land was owned collectively. 2) Labors’ income depended on their input contribution in the team. - Greater emphasis on modern inputs, i.e. irrigation, chemical fertilizers, hybrid rice, etc. in the 1960s and 70s. Reasons for the household responsibility system reform - despite the increase modern inputs, performance of agriculture continues to be poor. - Incentive was low in production teams as the degree of monitoring was low. - A fundamental reform in rural sector started in 1978. The household responsibility system - After the great Leap Forward, land was relocated to individual families. - Household restored as production units but was criticized as capitalistic and prohibited. - After the death of Chairman Mao in 1978, moderate leaders promoted new policy encouraging the development of a diversified economy. - A small number of production teams, secretly and with the blessing of local authorities, began to adopt a system of contracting land, other resources and output quotas to individual households. Yield were far larger than other production teams - In 1979 the central authority conceded this system and named it the ‘household responsibility system’ - In 1981 the system was given full official recognition and universal acceptance. - By the end of 1983, all rural households adopted this system. - 54% of the ou...