How agriculture powered China’s growth
Farm reforms led to higher agricultural surpluses in China, which helped drive investment in non-farm enterprises
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Mumbai: China’s growth story is largely associated with its manufacturing prowess, but the roots of China’s industrial success lay in agriculture, shows a paper by Sam Marden, lecturer at the University of Sussex. Agrarian reforms and the dismantling of communes boosted farm productivity in China’s early reform stage in the 1970s. This led to a rise in its agricultural surplus, which provided a source of capital to non-state firms.
Using county-wise data, Marden finds that areas with high growth in cash-crop cultivation also witnessed high non-farm growth, as higher farm surpluses in those areas led to higher investments in non-farm enterprises.
A National Bureau of Economic Research (NBER) working paper by Susan Athey, professor at Stanford University, and others argues that the existing framework of consumer privacy remains ill-equipped to meet the challenge of privacy in the digital era. People often say they value privacy but act otherwise. Even minor incentives, like a chance to win a free pizza, can often sway people to divulge personal information online. Also, companies can manipulate consumers to opt for less privacy by offering convenience or ease of transactions in return. To illustrate, students in the Massachusetts Institute of Technology overwhelmingly chose convenience over privacy when they were asked to select a digital ‘wallet’ to manage $100 worth of bitcoins. Moreover, the choice of ‘wallet’, with various levels of privacy, was often influenced by the order in which they appeared on screen.
While cheap imports from China arguably hurt US domestic industry, American consumers have gained from lower prices, according to research by Mary Amiti, an economist with the Federal Reserve Bank of New York, and others. However, the paper restricts itself to studying consumer gains and admits that it does not attempt to evaluate the overall welfare gains to the US from China’s exports. China joined the World Trade Organization (WTO) in 2001 after it was granted permanent normal trade relations (PNTR) status by the US in 1999. Subsequently, China’s exports to the US rose at an annual rate of 30% for the next five years and dented US manufacturing prices. However, the US’s increased openness towards China was not the only reason behind the lower prices. Rather, it was China’s decision to reduce import duties on raw materials and other inputs which ensured that it was able to flood the US market with its cheap exports.
Voter turnout tends to be higher when voters expect a close contest, suggests an NBER working paper by Leonardo Bursztyn of the University of Chicago and others. Pre-election opinion polls often shape perceptions over the tightness of a race and hence affect turnout. Analysing voting patterns in Swiss cantons, i.e., provinces, the researchers find that turnout was higher where newspapers reported the most about a possible close contest. In the absence of opinion polls, the apparent association between close contests and high turnouts might break down. Analysing Swiss referenda in the pre-opinion poll era, i.e. before 1998, the researchers find no relation between turnout and the closeness of a contest.
Rainfall shocks arguably explain the difference between rural populations in tropical Asia and Africa, according to a recent column by Kostadis Papaioannou and Ewout Frankema, researchers with the London School of Economics and Wageningen University, respectively. Shocks to rainfall, in terms of drought and flood, were much more frequent and severe in tropical Africa compared with tropical Asia between 1920 and 1940. This weighed on agricultural growth in Africa and arguably explains why “large parts of tropical Asia have historically been more densely populated than tropical Africa”. The countries covered under the study include India, Indonesia, Nigeria, Kenya and several other erstwhile colonies.
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