13 - Agriculture in China's Development: Past Disappointments, Recent Successes, and Future Challenges

Summary

Economists' views of agricultural and rural development in the modern world have changed dramatically in the past several decades. Traditionally, agriculture was seen as an inferior partner in development. Since the size of the sector falls during development, economists proposed a policy of benign neglect. Why should nations invest in a shrinking sector? Some academics urged policymakers to treat agriculture like a black box from which resources could be costlessly extracted (Lewis, 1954). They recommended directing all investment toward industry and the cities. As a low-productivity sector, agriculture did not deserve attention.

Countries that followed such advice sometimes achieved brief gains, but soon learned that neglect of the farm sector slowed the pace of growth and often led development efforts to fail (Timmer, 1998). Neglect of agriculture excluded a large part of the population from the development process. Without investment in agriculture, it was difficult to redeploy rural resources to support faster-growing segments of the economy. Without rural investment, dualism flourished, and agricultural production often fell, pushing food prices up. Many households fell into isolated subsistence. This undermined the stability that growth requires, causing development to stagnate or even go into reverse.

Many countries encountered these difficulties: Argentina, Mexico, Nigeria, and even to some extent, the former Soviet Union. In contrast, during the last century, nations that grew fast and entered the ranks of developed nations – notably, Japan and South Korea – emphasized heavy investment in agriculture as an integral part of their development strategy.