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How Asia Works

Success and Failure in the World’s Most Dynamic Region

By Joe Studwell
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How Asia Works: Success and Failure in the World’s Most Dynamic Region  by Joe Studwell
Synopsis

How Asia Works examines the economic development of nine Asian countries and, in the process, sketches a blueprint for other developing nations seeking to achieve sustainable economic growth. Joe Studwell explains why some Asian economies have boomed while others have fallen behind, revealing what history has proved works – and what doesn’t.

Key idea 1 of 9

To start development in poor countries, boost agricultural output by promoting household farming.

For a long time, Asia lagged behind the West’s technological advances. But then Japan, South Korea, Taiwan and, most recently, China, started to catch up and have now transformed into economic powerhouses. How did they do it?

Successful Asian states promoted small-scale household farming instead of moving prematurely to large-scale farming. Household farming maximizes output by effectively using the available labor force, while large-scale farming generates few jobs and low agricultural output.

This may seem counterintuitive at first, as huge farms appear to be the most efficient method of agricultural production. However, unlike in the manufacturing sector, increasing scale in agriculture doesn’t create higher output or better quality. Only fertilizer and intensive labor can improve yields and quality.

What’s more, the mechanization that comes along with large-scale farming can be harmful in poor countries because it reduces the amount of farming jobs available and the yield each plant can produce. Mechanization only makes sense if labor is scarce, which is typically not the case in poor countries.

In fact, human labor-intensive techniques are crucial to getting the highest yields possible.

For example, shade-tolerant vegetables like celery can be cultivated in the shade of taller plants, which makes it possible to grow more within the same area – but this requires planting and harvesting by hand. Such techniques create agricultural outputs that dwarf those of machines and large-scale farming.  

Promoting household farming also has other positive effects: it creates jobs in developing countries.

Since the industry and service sectors are not strong in poor countries, the labor force has no other employment alternative than agriculture. That’s why it makes sense to have an agricultural sector composed of household farms that offer lots of jobs until better alternatives of employment come along.

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