Land fragmentation and farm productivity in China in the 1990s

The main objective of this study is to examine the effects of fragmentation on farm productivity in China and to discuss policy implications. Some earlier work has questioned the importance of the economic costs of land fragmentation in developing economies. It has been argued that policymakers should focus instead on reducing the root causes of fragmentation: inefficiencies in land, labour, credit, and food markets. Our results, using a more recent and larger dataset from a household survey in China, find that fragmentation does have an economic cost in China. Production functions are estimated for each of the major grain crops in the sample provinces. We also argue that to reduce the economic costs, land consolidation in China should be undertaken with less government intervention. More attention should be given to the establishment of markets for land (or land use rights) and improvements in rural credit and grain markets.     

Land use change and environmental stress of wheat, rice and corn production in China

Grain self-sufficiency is one of the most important agricultural policy goals in China. With only modest imports, China has succeeded in feeding 22% of the world's population on only 7% of its land. However, a high price has been paid for this enormous achievement. Increase in grain yields, in particular in rice, as the main source of production growth, relied heavily on intensive use of physical inputs and increasing intensity of farming systems. Soil degradation, water scarcity, and severe pollution were among the consequences as well as declining efficiency of fertilizer application. Using county-level panel data from 1980 to 2003 and graphical (GIS-based) analysis, this paper first looks at the spatial change of the major grain production across regions over the past two decades, towards the northern and northeastern provinces. The analysis is complemented by using a random panel data model, which underscores the significant influence of land availability, degree of urbanization, and government policy on grain production. Finally, this analysis addresses environmental stress which includes both soil degradation and water shortage. The latter is already severe in many of the traditional grain producing areas, but will now become a bigger problem in the “new” grain producing areas, as these have traditionally much less water resources. Hence, while the economic rational of the “grain shift” towards the northern and northeastern regions is understandable, its sustainability is not guaranteed.     

An alternative method of measuring economic efficiency: The case of grain production in China

The objective of this paper is to suggest a simple method to gauge the economic efficiency of firms, when there are no reliable price data. Applying the suggested method on the recent Chinese farm-household survey data collected during 1993 and 1994, this study shows that majority of grain farmers in China are not producing at the optimum levels which yield maximum profits. The analysis also indicates that output can be increased by consolidating rather than further segmenting the operational area of grains.     

A note on the CERU-MoA grain farm household survey in China

During the period 1994–1995 the Chinese Economy Research Unit (CERU), University of Adelaide, Australia and the Department of Policy, Reform and Law, Ministry of Agriculture (MoA),¹ the People's Republic of China, jointly designed and conducted an annual sample survey of about 1000 farm households in five Chinese provinces: Guangdong, Jilin, Jiangxi, Sichuan and Shandong. The CERU-MoA survey is a part of the ACIAR (Australian Centre for International Agricultural Research) project on China's grain production and marketing during 1994–1996.² Based on this survey a large database has been established which contains cross-household data on population and labour, land, grain production and marketing, food consumption, income and related policy issues.³     

China''s land arrangements and rural labor mobility

Chinese farm families under the Household Responsibility System have the land use-rights but not the rights of alienation. If permanently leaving agriculture, they have to return the land to local authorities and consequently give up a stream of future land earnings. This paper analyzes the deterrent effect of this land arrangement on labor mobility by constructing a household model which considers both part-time farming and permanent migration decisions. The implications of the model are consistent with the recent Chinese experience of rural floating population in cities and the rapid growth of rural nonagricultural employment.     

Testing contagion of the 1997–98 crisis in Asian stock markets with structural breaks and incubation periods

This study tests for the existence of financial contagion, using a method that allows an incubation period before contagion takes effect. We define contagion as an increase in cross-market linkages following shocks. With daily data on Asian stock markets during the 1997–98 crisis, we find significant upward shifts in the linkages between the Asian markets of both crisis and non-crisis countries. The upward shifts are maintained even after controlling for heteroskedasticity and common world and regional factors, providing strong evidence for financial contagion.     

Serial defaults, serial profits: Returns to sovereign lending in Habsburg Spain, 1566–1600

Philip II of Spain accumulated debts equivalent to 60% of GDP. He also defaulted four times on his short-term loans, thus becoming the first serial defaulter in history. Contrary to a common view in the literature, we show that lending to the king was profitable even under worst-case scenario assumptions. Lenders maintained long-term relationships with the crown. Losses sustained during defaults were more than compensated by profits in normal times. Defaults were not catastrophic events. In effect, short-term lending acted as an insurance mechanism, allowing the king to reduce his payments in harsh times in exchange for paying a premium in tranquil periods.     

Sustainable natural resource use in rural China: Recent trends and policies

In this paper we provide an overview of recent trends in the availability and quality of land and water resources in rural China, and examine the common presumption that rural resources are rapidly degrading in China. Data based on consistent definitions and measurement methods that have recently become available are used to that end. In addition, we analyse the impact of new policy initiatives to introduce market-based instruments and new institutions to address land degradation and water scarcity problems.We find that the decline in cultivated area has accelerated in the beginning of the new century. Ecological recovery programs, not urbanization and industrialization, are the major factors causing this decline. Ecological recovery programs are also a major force behind the increase in forest land area and the reduction of water erosion. Modest successes can be observed in the protection of wetlands and (until the mid-1980s) for the average quality of cultivated land. On the other hand, degradation of natural grassland and wind erosion have become much more severe in recent decades.In northern China, particularly in the 3-H (Hai and Luan, Huai and Huang) river basins, the availability of water has tightened. Groundwater tables have fallen considerably in the Hai river basin, because farmers increasingly rely on groundwater for irrigation. Evidence on other parts of northern China is mixed. Pollution of surface water is getting worse since the beginning of the 1990s in two major lakes in southern China and until recently in the rivers in northern China. Water quality problems in the larger rivers in southern China are less severe and getting less. These problems are to a large extent caused by agriculture-based non-point source pollution, especially in the major lakes and reservoirs.The sloping land conversion program, water pricing, and the establishment of water user associations and payments for environmental service projects are used as cases to examine the introduction of market-based instruments and new institutions. We argue that less government interference in the implementation of these instruments and institutions is likely to enhance ecological as well the economic benefits. Moreover, supportive measures to improve the functioning of land and labor markets are usually needed to ensure the sustainability of the impact of interventions.     

Poverty and firewood consumption: A case study of rural households in northern China

This paper discusses the determinants of firewood consumption in a poor township in rural northern China, with a special focus on the relationship between households' economic wealth and firewood consumption. We find strong support for the poverty–environment hypothesis since household economic wealth is a significant and negative determinant of firewood consumption. Firewood can therefore be considered as an inferior good for the whole population in the rural area under study, although further evidence shows that at the top of the wealth distribution, there might be a floor effect in the decreasing firewood consumption. Besides economic wealth, our analysis also shows that the own-price effect is important in explaining firewood consumption behavior, the price effect gaining importance with rising incomes. Finally, increasing education is also found to be a key factor in energy consumption behavior, especially when dealing with energy source switching behavior.     

Productivity growth, technological progress, and efficiency change in chinese agriculture after rural economic reforms: A DEA approach

This study applies a data envelopment analysis (DEA) approach to analyze total factor productivity, technology, and efficiency changes in Chinese agricultural production from 1984 to 1993. Twenty-nine provinces in China were classified into advanced-technology and low-technology categories. The Malmquist (1953) productivity measures were decomposed into two components: technical change index and efficiency change index. The results show that total factor productivity has risen in most provinces for both technology categories during the 1984–1993 period. Technical progress was mostly attributed to Chinese agricultural productivity growth after the rural economic reforms. The deterioration in technical efficiency in many provinces indicates China has great potential to increase productivity through improved technical efficiency. Enhancing rural education and research and development (R&D) in agriculture may also help farmers to improve technical efficiency and productivity in agricultural production.     

Do Chinese farmers reinvest in grain production?

Grain production is affected by the relocation of farm household labour from on-farm to off-farm activities and by an increase in the investment in grain production as a result of increase in farm household income that occurs along with such a labour shift. This study uses a recent farm household survey data to examine whether Chinese grain households do reinvest in grain production. It has found that household income growth contributes to higher investment in grain production although a higher share of non-agricultural income has a negative effect. The authors' other research has found a negligible direct impact of farm to non-farm labour transfer on grain production. We may conclude that in the near future, the total impact (direct and indirect) of labour transfer from farm to non-farm production on grain output is expected to be positive. In the long run, in may become negative when more and more labour shifts out of grain production and marginal product of labour becomes positive.     

A decomposition analysis of income inequality of Chinese rural households

This paper reports an application of household survey data collected from grain producing areas in five provinces of China to issues of the determinants of rural inequality. Previous studies suggest that non-agricultural activities have been the major cause of rural income inequality, which has important implications for policy formulation. However, our results show that inequality within the grain producing areas was also very high, with differences in crop income as the major source of inequality. The policy implications are also different from those of previous studies. While some suggest that an increase in agricultural income can reduce inequality, our results indicate that this is not universally true. In some cases, whether the increase in crop income has come from state procurement also matters. These results call for a more cautious and area-specific approach to policy formulation as far as inequality is concerned.     

Technological choice of Chinese rice farmers

This paper investigates the technological choice followed in China's rice production, using primary farm household survey data collected in 1994. Drawing on the modelling procedures used by Lin (1991), the empirical testing done in this paper fails to confirm the hypothesis of induced technological choice, the well known Hicks-Hayami-Ruttan-Binswanger hypothesis. The analysis reveals that Lin's formulation may under certain circumstances lead to odd results when looking at cross section data. As an alternative specification, this study proposes cost shares in the place of physical quantities while modelling the production process. Empirical results using our suggested specification clearly confirm the hypothesis of induced technological choice.     

The usefulness of earnings versus book value for predicting stock returns and cross corporate ownership in Japan

Using a sample of Japanese firms, this paper evaluates the usefulness of the two fundamental products of an accrual accounting system, namely accrual earnings and book value of equity for predicting stock returns. Our analysis shows that both earnings and book value for Japanese firms have the ability to provide for profitable trading strategies or improved portfolio decisions, and that relative to the trading strategy based on earnings or book value alone, the trading strategy based on a combination of both earnings and book value generates substantially higher returns for all cases. This suggests that book value (or earnings) captures certain aspects of equity values that are not captured by earnings (book value). Our multivariate regression results further indicate that the predictive ability of earnings is dominated by that of book value. Finally, it is found that the predictive ability of book value is sensitive to the degree of cross corporate ownership, while it is insensitive to the degree of real estate holding.     

The direct impact of the relocation of farm labour on Chinese grain production

The shift from collective to household-based farming and the move towards a market economy have increased the opportunity cost of grain production and caused a withdrawal of labour from grain farming in China. Since Chinese grain production is important to both China and the world, there are concerns about whether such a farm labour relocation will have a destructive impact on China's grain production. The previous production function studies ignored the effects of changes in labour quantity and quality on grain production. Using recently available sample survey data on Chinese farm households, this paper incorporates production function analysis with human capital analysis to examine the direct impact of the relocation of farm labour on China's grain production. It has found that the relocation of farm labour has not harmed the Chinese grain production in general, but its impact varies across regions with different factor endowments that affect the choice of farming technology.     

Threshold effect in international linkage of stock prices

This paper examines whether the international linkage of the stock price indexes found in previous studies is confirmed for the case where the stock index changes only slightly, utilizing the daily stock price index data from 1975 to 1995 for the US, UK, Germany, and Japan. Using dummy variables in the regressions, it is shown that small changes in the stock price index of any country do not affect the other country's index. In contrast, large changes have a significant effect in most cases. Thus, there is a threshold effect in international linkage of stock prices. It is also shown that negative large changes have a clearer effect than positive ones.     

Danger on the exchange: How counterparty risk was managed on the Paris exchange in the nineteenth century

In the nineteenth century, the Paris Bourse struggled to manage counterparty risk, revealing the awkward choices for the regulation of derivatives markets. The exchange, primarily a forward market, instituted a mutual guarantee fund to prevent broker failures from snowballing into a liquidity crisis. The fund then forced the Bourse to search for mechanisms to control moral hazard. With new archival data, we describe the evolving regulatory regime and analyze the determinants of broker failures. The Bourse faced a conundrum; when it finally imposed a tight regulatory regime that limited risk, trading began to migrate off the exchange to less regulated markets.     

The impact of agricultural technology adoption on income inequality in rural China: Evidence from southern Yunnan Province

This study analyzes the impact on income inequality of government efforts to increase agricultural incomes in rural China. It collects and analyzes survey data from 473 households in Yunnan, China in 2004. In particular, it investigates the effects of government efforts to promote improved upland rice technologies. Our analysis shows that farmers who adopted these technologies had incomes approximately 15% higher than non-adopters. Despite this relatively large increase, we estimate that the impact on income inequality was relatively slight. This is primarily due to the fact that lower-income farmers adopted the improved rice technology at rates that were roughly equivalent to those of higher-income farmers.     

China's grain marketing system reform in 1993–1994: empirical evidence from a rural household survey

By utilizing a rural household survey, this paper domonstrates the progress in China's grain marketing reform in 1993 and evaluates to what extent the reform was reversed in 1994. Specifically, we investigate the degree of commercialization, changes in state's contract procurement quota and changes in the marketing channels. Overall, the grain market has been liberalized to a very large extent. Participation of the private traders have already grown to a significant level, occupying more than one-third of the market share for wheat and rice and more than half for maize. For minor crops, the share of private traders were even bigger. Despite the reversal in 1994, the grain market was still very “open.” Counting all grain types, the state was controlling only about one-third of the marketed surplus. However, if the central leadership perceived any serious instability in the market for a certain grain, examples provided illustrate how the state's control could certainly be strengthened significantly.     

Agricultural institutions, industrialization and growth: The case of New Zealand and Uruguay in 1870–1940

In this paper we apply a model of early industrialization to the case of New Zealand and Uruguay in 1870–1940. We show how differences in agricultural institutions may have produced different development paths in two countries which were similar under many respects. While in New Zealand the active role of the Crown in regulating the land market facilitated access to land, in Uruguay land was seized by a small group of large landowners. Our model shows that land concentration may have negatively influenced industrialization and growth by impeding the formation of a large group of middle-income landowners and, as a consequence, the development of a domestic demand for basic manufactures. We support this view with a comparative analysis of agricultural institutions and industrial development in New Zealand and Uruguay.