The State and the Rural Economy in the Chinese People’s Republic

Jack Gray

Chapter 6 in Developmental States in East Asia, 1988, pp 193-234 from Palgrave Macmillan

Abstract: Abstract In the advanced economies, income elasticity of demand for food is usually low; state intervention in agriculture tends to take the form of subsidies to maintain farm incomes. In the LDCs, it is supply which is inelastic: state intervention in this case has a double task; to provide incentives to agriculture by increasing the profitability of farming, while avoiding increases in retail food prices which would raise wages in industry and so reduce industrial capital accumulation. In theory a policy of subsidising food prices would reconcile these two objectives; in fact the resources seldom exist. In the competition, urban interests usually win, and farm prices are kept lower than market prices by state intervention.

Keywords: Heavy Industry; Cultural Revolution; Rural Economy; Arable Farming; Great Leap (search for similar items in EconPapers)
Date: 1988
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DOI: 10.1007/978-1-349-19195-6_6

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