Agriculture Reference
In-Depth Information
for these commodtes. The second s that mports wll substtute for
domestc producton n proporton to the exstng regonal concentraton
of the commodtes.
The two possbltes wll have dfferent mplcatons for regonal
adjustment costs. The first is to be preferred, as it allows the principle of
comparatve advantage to play a larger role n resource allocaton. The
second, less desirable, possibility is in line with the policy stance that
has emphasised provincial grain self-sufficiency. Under the first scenario,
those provnces wth comparatve advantage n labour and land-ntensve
commodtes wll have relatvely small adjustment costs. Those provnces
wthout comparatve advantage n labour-ntensve or land-ntensve
commodities are likely to be worst off as they will benefit least from export
expanson and have to bear the largest adjustment costs. The eastern
region is seen as likely to be the major beneficiary from export expansion
of labour-intensive products, while the inland regions are expected to
receive much smaller benefits. On the other hand, the coastal regions
could experence a larger share of the adjustment costs from the mport
growth whle nland provnces could have less adjustment.
Under the second scenario, the regional distribution of the import-
substtuton effects changes consderably. The central and western regons
could incur a large share of the adjustment costs—that is, they are likely to
have a combnaton of small export-promotng effects and large adjustment
costs. Ths could result n an ncrease n the ncome gap between the
coastal and nland regons.
To maximise the likelihood for scenario one to materialise, agricultural
polces should be changed n a more market-orented manner. There should
be a move away from the emphasis on regional self-sufficiency. As well, the
state monopoles n domestc marketng and dstrbuton of bulk agrcultural
commodtes as well as n transport should be removed to allow goods to
flow more freely across provincial borders.
In another of the project studies, Jiang (2002) examined the growing
income gap between the coastal and inland regions for the period 1978-
2000. Ths study found that the gap was unchanged or had even declned
from 1978 to 1990—the period in which China undertook major agricultural
reforms and experenced hgh growth n the agrcultural sector. Ths
development favoured the poorer regons that had hgher agrcultural
