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November 16, 2009

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November 16, 2009

Ha-Joon Chang uncovers what's worked in the history of agricultural policy

November 16, 2009
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I vividly remember the impact of Ha-Joon Chang’s 2002 book ‘Kicking Away the Ladder’. At the time I was an NGO lobbyist on the WTO’s Doha round of trade talks, and Ha-Joon’s book showed how when they were still poor, today’s rich countries had systematically used the industrial policies and other forms of state management of the economy that they were now urging the WTO to outlaw. Within months the book’s expose of northern double standards was being quoted extensively by developing country delegates at the talks.

Now, he’s turned his historical attention to agriculture, in a study for the FAO that examines the agricultural policies of 11 now-developed countries, along with 10 developing and transition economies. A book will emerge eventually, but he’s summarized the findings in the Journal of Peasant Studies. Here’s a summary of the summary:

commercial farming‘In the earlier stages of development, today’s rich countries had to grapple with the very problems that dog the agricultural sector of today’s developing countries – land tenure, land degradation, fragmentation of holdings, agricultural research, extension services, rural credit, irrigation, transport, fertilizers, seeds, price and income stabilities, trade shocks, agro-processing, marketing, and so on.

Many successful policy interventions have gone well beyond (or even against) the scope recommended by the New Conventional Wisdom (NCW), which has ruled agricultural (as well as other) policies in the last quarter of a century:

· Japan and other East Asian countries had a very successful comprehensive land reform that included strict land ownership ceilings.

· Virtually all of today’s rich countries used state-backed specialized rural banks and credit subsidies, state-subsidized agricultural insurance, public provision or subsidization of warehousing facilities, and input (e.g. fertilizers) quality control

· Denmark and some other European countries benefited from effective export marketing boards

· The USA and Japan successfully used price stabilization measures

The exact institutional forms of successfully delivering critical needs of the agricultural sector have varied enormously across time and space. There were successes with all forms of delivery in all sorts of countries – public provision (e.g. agricultural research in the USA, extension in the Netherlands, irrigation in Vietnam, seeds in Mexico, rural credit in Germany), private provision (e.g. marketing service through contract farming in Zambia, machinery services in Egypt), private delivery subsidized by the state (e.g. agricultural insurances in Chile, certain types of research in the Netherlands), public-private partnership (e.g. irrigation in Sweden), co-operatives (e.g. butter and bacon processing and marketing in Denmark, credit co-ops in Germany), state-co-operative partnership (e.g. rural banks in Ghana, export marketing in Denmark, fertilizer supply in Korea) – that suggests that the standard dichotomy between the public sector and the private sector is crippling our policy imagination. Moreover, none of these modes are invariably successful – failures occur in each.

peasant farmingFinally, the study shows the importance of active importation and adaptation of policy/institutional innovations from abroad as well as of policy/institutional innovations of one’s own.’

Conclusion? ‘History frees our “policy imagination” by showing that the range of policies and institutions that have produced positive outcomes for agricultural development has been much wider than any particular ideological position – be it the pre-1980s statist one or the pro-market NCW – would admit.’

This is dynamite. Kicking Away the Ladder led to us becoming friends and working together, and also provided me with a handy principle when considering different economic policy proposals – ‘more history, less maths’. The picture that emerges from this new paper may be more nuanced than the ‘industrial policy good, liberalization bad’ core message of KATL, but it fully confirms the relevance of history.

3 comments

  1. I love Ha-Joon Chang, if I was the kind of person who believe in prayers I would pray for him…
    and his timing was almost perfect!

    C.

  2. Thanks for posting this–I’ll have to check out the article. I find Ha-Joon Chang’s work remarkably refreshing in its simply looking at history. Bad Samaritans–despite its weirdly provocative title–is one of the best books I’ve read on the state’s role in development.

    By the way, Duncan, I really appreciate your blog. I’m an economist for USAID and I come here first to hear about the most recent news in development. Thank you!

  3. this could not come at a better time- however I would not say that it is the ‘standard dichotomy between the public and private that is crippling our imagination’- rather that it is the failure to try anything public at all in the NCW (I don’t like NCW as that implies a. it is new (liberalisation in agriculture has sadly been with us for 30 years now and has done untold damage) and b. it is wisdom (unless this is ironic!)

    We need a strong and robust debate of how to boost the role of the public sector and government in agriculture, and the heterodox ways this can happen, often in partnership or supporting an evolving and preferably smallholder based private sector- this is still barely discussed. The amazing experience of countries like malawi in recent years who have achieved huge amounts by ignoring the NCW have still yet to impact on a generation of OCMO, old conventional market obsessives.

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