Distortions to Agricultural Incentives in Japan, Korea, and Taiwan
The story of agricultural policy in Northeast Asia over the past 50 years illustrates the dramatic changes that can occur in distortions to agricultural incentives faced by producers and consumers at different stages of economic development. In this study of Japan, the Republic of Korea (the southern part of the peninsula, hereafter referred to as Korea) and the island of Taiwan, China (hereafter referred to as Taiwan), the authors estimate the degree of distortions for key agricultural products as well as for the agricultural sector as a whole over a period when these economies transitioned from low- or middle- to high-income status the beginning of the so-called East Asian economic miracle of dramatic industrial development. The three economies in terms of the nature of their economies, including their resource endowments that determined the course of their modern economic growth and development. The evolution of agricultural policies in the three economies is then reviewed before discussing how to measure distortions to agricultural incentives using the methodology from Anderson et al. (2008), the focus of which is on nominal and relative rates of assistance. Implications of empirical findings for policy reforms in the three economies are discussed in the final section, where the authors also identify lessons for later-developing economies experiencing similar structural transformations in the course of their economic growth. Statistical observations are found to be consistent with the hypothesis that the success of rapid industrialization that advanced these economies to the middle-income stage resulted in declines in agriculture's comparative advantage associated with the growing income disparity between farmers and employees in non-agricultural sectors.
Summary: | The story of agricultural policy in
Northeast Asia over the past 50 years illustrates the
dramatic changes that can occur in distortions to
agricultural incentives faced by producers and consumers at
different stages of economic development. In this study of
Japan, the Republic of Korea (the southern part of the
peninsula, hereafter referred to as Korea) and the island of
Taiwan, China (hereafter referred to as Taiwan), the authors
estimate the degree of distortions for key agricultural
products as well as for the agricultural sector as a whole
over a period when these economies transitioned from low- or
middle- to high-income status the beginning of the so-called
East Asian economic miracle of dramatic industrial
development. The three economies in terms of the nature of
their economies, including their resource endowments that
determined the course of their modern economic growth and
development. The evolution of agricultural policies in the
three economies is then reviewed before discussing how to
measure distortions to agricultural incentives using the
methodology from Anderson et al. (2008), the focus of which
is on nominal and relative rates of assistance. Implications
of empirical findings for policy reforms in the three
economies are discussed in the final section, where the
authors also identify lessons for later-developing economies
experiencing similar structural transformations in the
course of their economic growth. Statistical observations
are found to be consistent with the hypothesis that the
success of rapid industrialization that advanced these
economies to the middle-income stage resulted in declines in
agriculture's comparative advantage associated with the
growing income disparity between farmers and employees in
non-agricultural sectors. |
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