Embedded within the macroeconomic story is a story about the
performance of agriculture. With the exception of Singapore and Hong Kong, the
rapidly growing Asian economies have relied on agricultural prosperity as a
stepping stone to industrial 12 modernization. In Japan, Taiwan (China), China,
the Republic of Korea and even some of the Southeast Asian countries, such as
Malaysia and Thailand, thriving agricultural sector contributed in four ways: It
was a source of capital and surplus rural workers, which provided nascent
industries with cheap labor.
Rising rural incomes created markets for manufactured goods and
services, which in turn contributed to the early spread of small and medium-size
enterprises (Park and Johnston 1995).
intensification and diversification into cash crops established forward linkages
to processing industries, which became the nucleus of a diversified rural
industrial system closely tied to the urban economy.
· An efficient, outward-oriented
agricultural sector became, in some cases, a significant exporter of cash crops
that brought in much needed foreign exchange. Or, after a period of gestation
rural industry began to produce for overseas markets, capitalizing on their
lower overheads and more competitive labor markets.
In all countries in which agriculture has played a handmaiden's
role, exports and rural industry entered at a later stage of development. First
agriculture had to be put on sound footing by raising land and labor
productivity. Labor productivity can be increased by enlarging the cultivated
area or by augmenting land quality. But because good land quickly becomes scarce
in most countries, gains in land productivity are mainly derived from planting
high-yielding hybrids, using more fertilizers and pesticides, and practicing
better water management, especially by using pumps and mechanization that
facilitates multiple cropping or helps shave seasonal labor