Page 11 - Griffenomics

FACT:

BETWEEN 1952 AND 1961, TAIWAN’S ECONOMY GREW BY AN AVERAGE OF 9.21% EACH YEAR

SPRING ISSUE

GRIFFENOMICS

11

participated, which helped to stop wide-

spread evasion of the rules. The govern-

ment legislation passed in 1953 dictated

that there would be expropriation of

land in excess of around three hectares,

and the landlords would be compensat-

ed for it. These terms were quite similar

to those of Japan, and very soon Taiwan

saw a positive eect. One estimate shows

that around 13 percent of Taiwan’s GDP

was passed from one group of people to

another, which shows the scale of the re-

form.

In 1960, 64 percent of agricultural

land was being farmed by owner-cultiva-

tors (people that own and farm their own

land), which was up from the 30 percent

in 1945. This evened out the income dis-

tribution of Taiwan, and led to the coun-

try moving towards equality. In fact, sur-

veys showed that Taiwan moved from a

Gini coe¢cient of 0.56 in 1950 to 0.33 in

1960, which was unprecedented for a de-

veloping country. The Taiwanese govern-

ment was also highly supportive, encour-

aging farms to diversify their crops and

to grow produce such as mushrooms and

asparagus, which is much more labour

intensive, but has a much higher value

added. This variety of crops led to a dom-

inance in exports, and soon this was the

main driving force which led to the boom

in Taiwan’s economy.

Unfortunately, not every country fol-

lowed this model to economic success.

In the case of the Philippines, one huge

problem is evident: there was no radical

land reform in which compulsory land

redistribution was promoted. The main

reason for this was that, although the US

embassy in Manila supported this land

reform, it did not win support in Wash-

ington. This was very key as it meant that

the huge driving force that was present

in both Japan and Taiwan was lacking

here. Ferdinand Marcos, the leader at

that time, declared that he would execute

a set of land reforms, but by the time of

his fall (1986), he had only achieved less

than a quarter of his own targets. This

was mainly because he targeted proper-

ty largely owned by his political enemies,

and the land reformwasmore for his own

gain than for the country’s wellbeing. As

Corazon Aquino took over in 1986, the

country was destined to have no success-

ful land reform.

One of the main reasons for this was

that she owned a 6,400-hectare estate,

which was her main asset. Promises were

made to the people about land reform,

and the Philippines congress came up

with a Comprehensive Agrarian Reform

Law (CARL), which has many loopholes

within it and is still being implemented

today. Problems with the CARL include

an absurdly high retention limit and ex-

ploitable loopholes, such as the Stock

DistributionOption, which allowed land-

lords to give its tenants equity instead of

plots. Furthermore, rich clans, such as

the Benedictos, simply refused to give up

the land that they owned, and due to the

fact that they were close with the govern-

ment as well as considerably powerful,

nothing was done about it. Finally, after

a while, the government decided to move

along with compulsory land reform and

issued Certificates of Land Ownership

Awards (CLOAs) to farmers.

As you can probably guess, this didn’t

end well unfortunately. The main reason

for failure was that there was complete

lack of state backing. The peasants that

received the CLOAs were simply too poor

to farmtheir own land, andhence,most of

them immediately leased their land back

to the Benedicto family, and went back to

becoming wage labourers. Ironically, the

only land reform that has worked in the

Philippines was when non-governmental

organisations stepped in to help a hand-

ful of families through providing lending,

crop processing, marketing support, and

other services of this sort. This group of

farmers are much better o than the av-

erage Filipino farmer, and they are so

successful that they have enough money

to invest in capital to further boost their

yield.

The importance and significance of

successful land reform cannot be under-

stated in the lead up to the current state

of play amongst the Asian powerhouses.

Ironically, out of the three countries that

have been compared above, the Philip-

pines is the one which has the most suit-

ed climate and the greatest amount of

arable land for agriculture. This shows

that it is not the climate which hinders

countries from growing, but the human

will and determination.