Agriculture Reference
In-Depth Information
workers. When we combne the most expansonary polcy scenaro wth
the ancillary effects of productivity and services reform (Table A10.2), the
expanson n overall employment permts employment n each sector to
increase, as indicated in the final column of Table A10.6. Of course, there
remains considerable redistribution of employment in these results, since
the servces sectors expand ther labour use much more rapdly than does
agriculture. Since we focus on the short run, we take no explicit account
of techncal change n Chnese agrculture. In other countres at the same
stage of development this change has been labour saving, enabling the
agrcultural sector to shed workers at a consderable rate (Anderson et
al. 2002).
Our contenton that the macroeconomc polcy envronment s mportant
n determnng the pace of worker relocaton demand s borne out n these
results. In all sectors there s a stark contrast between employment growth
under tight capital controls and a fixed exchange rate regime on the one
hand and an investment policy that renders the capital controls ineffective,
combined with a flexible exchange rate, on the other. When the ancillary
shocks to productivity and services capital are included, this gulf widens
further. In the case of this most optimistic of scenarios, employment growth
exceeds the average snce 1990 n all but two sectors and the excess s
largest n constructon and dwellngs and transport servces. These strong
worker relocaton demands nonetheless fall short of the maxma acheved
in a single year in all sectors, even since 1990.
Yet the WTO accesson reforms are but a small part of the pantheon
of China's overall reform program, the bulk of which is growth enhancing.
We not only exclude the trend of technology and assocated organsatonal
changes, as mentioned previously, but we take no account of the ongoing
financial sector reforms and the continuing transformation of urban activity
from the publc to the prvate sector. Even n the case of Chna's WTO
accession, we take no account of commitments by China's trading partners
to reduce protecton aganst ts labour-ntensve exports. These changes
wll mprove Chna's terms of trade and stmulate ts growth. Consderng
such omissions, worker relocation demand in a more expansionary policy
environment could well approach, or even exceed, the high rates of change
observed n the early 1990s.
