Topic_5_Agriculture - Economics 162 The Economy of China...

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Economics 162 The Economy of China Topic 5 – China s Agriculture Professor David Roland-Holst Department of Agricultural and Resource Economics Tuesday and Thursday, 3:30-5PM, 105 Stanley Hall
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Roland-Holst 2 Economics 162 Economics 162 Agriculture • Rural Area Agriculture Sector – “Urban population” 1/3; “Rural population” 2/3 – But agriculture labor force is around ½ • Why? – Many working in the urban areas without urban residence permit (counted as rural residents) – Many rural residents working in rural industry not in agriculture (Township and Village Enterprises)
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Roland-Holst 3 Economics 162 Economics 162 The Importance of the Agriculture Sector • China is the world s largest consumer and producer of food • The traditional sector, largest in terms of employment • The disastrous sector under central planning • The successful first reform sector • Economic linkages to other sectors – Releasing excess labor (very important) – Providing savings (now going in reverse) – Generating consumer demand (eventually)
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Roland-Holst 4 Economics 162 Economics 162 Rural Organization Natural Units 1962-84 1984-present Market town Commune(2000hh) Township Large village Brigade (200hh) Village Small village Teams (50 hh) or neighborhood Household Household Household
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Roland-Holst 5 Economics 162 Economics 162 Basic Features of Agricultural Collectives • Property Rights: The land was pooled and worked in common – Land is “collectively owned” • Management: The collective served as the basic accounting unit • Distribution: Net income was distributed to households on the basis of work points – Households accumulate work points over one year – The collective after paying taxes, deducting “collective accumulation” (retained public funds) distribute income to households by the year end, in grain and cash
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Roland-Holst 6 Economics 162 Economics 162 Benefits of Agricultural Collectives • Achieves government s goal of product mix – Grain is priority in planning: “Take grain as the key link” • Mobilization of resources for big projects – Consolidation of scattered land – Big construction projects such as irrigation system • Local public goods – Water supply – Education – Health care (“barefoot doctors”) – Some insurance (risk pooling) functions • Non-agricultural activities – Rural industry (small factories and workshops)
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Roland-Holst 7 Economics 162 Economics 162 Costs of Agricultural Collectives • Terribly inefficient in agricultural production • Why? Incentive problems • Structural features of agricultural production – Output takes long time (usually one year) to produce – A long sequence of tasks (sowing, weeding, watering, harvesting, etc.) – Important input is effort, which is hard or costly to measure – Workplace only measures time spent – Adjustments made according to age, gender, health, but imperfect (manual work)
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Roland-Holst 8 Economics 162 Economics 162 Outcome of Agricultural Collectives
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Topic_5_Agriculture - Economics 162 The Economy of China...

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