Why rural development comes first

One common criticism this blog has been getting has to do with its rural focus. “Sure,” people argue, “most of the very poorest live in the countryside. But, overwhelmingly the way they get less poor is to move to a city.”

This is true. Urbanization has been a key feature of every fast development experience there’s ever been. So, in terms of grand strategy, why would you waste your time messing with rural producers?

In Taiwan and South Korea, the cities had to compete for rural people to want to move there.

That’s what I thought too until I read Diane Davis’s remarkable Discipline and Development: Middle Class Prosperity in East Asia and Latin America. (You can read the brilliant intro online here.)

Davis’s book is a perfect little counterpoint to Robert Bates’s classic Market and States in Tropical Africa, (which it really helps to have read before you dive into it.)

For Bates, the political economy of the post-colonial African state was pretty simple: they were machines for extracting rents from farmers and transferring them to urban constituents. Through a series of institutional mechanisms handed down from the Colonial past (chief among them, the dreaded Agricultural Marketing Board), African states systematically looted the countryside, underpaying for products, undersupplying services, and spending the proceeds on a series of industrial boondoggles in town. It…wasn’t a very successful development model, in large part because it created powerful incentives for industrialists to specialize not on running profitable industries, but on pressuring the state to extract rents from rural people and hand them over.

Bates’s book is the stuff of a thousand undergrad syllabi, I think most people in the development game have at some point come across the argument. What I find dismaying is that Davis’s book, which is at least as good (for my money, way better), is…not as often read. What she shows is that some of East Asia’s fastest developers of the Tiger years turned the political economy of African states on its head.

Davis shows how in Taiwan and South Korea – which, in the 1950s, were just as poor as Uganda or Nigeria – land reform produced a class of prosperous, independent, middle-class rural producers. The producers – mostly rice farmers in South Korea, a mix of rice and sugar-cane farmers in Taiwan – were politically powerful. Powerful enough to resist any thought industrialists might have had to finance industrial expansion on their backs.

If anything, it was just the opposite: rural people put the heat on the government to squeeze the industrialists for surpluses. In this narrative, Taiwanese and South Korean industrialists’ export orientation was forced on them by a political dynamic where they were relatively weak, and under strong pressure to perform.

Davis is a particular fan of the Taiwanese model, where farmers, she argued, really did have the whip hand over industrialists. In one of the more eye-opening bits of the book, she comments on the way the relative shabbiness of Taipei – contrasted with the gleaming sky-scrapers of Seoul – is actually a testament to Taiwan’s “balanced development.” The government couldn’t be seen to be building prestige projects in the capital, rural people were to powerful to be snubbed like that. What surplus industrial expansion brought in had to be ploughed right back into agriculture, (well, and the army.)

This counterintuitive way that a focus on rural incomes can end up generating success in urban economies works on a number of levels.

As Steve Wiggins of Future Agricultures puts it,

Yes, it is true that both empirically and normatively agriculture will get smaller and less important with development — relative to other sectors, and smaller absolutely in employment — but that doesn’t mean that this will be achieved by ignoring farming. On the contrary, one of development’s great paradoxes is that the quickest way to get out of agriculture is to raise agricultural productivity. That this will almost certainly produce the most equitable and benign transformation — it remains the case that agricultural growth reduces poverty more than any other sector in most low income countries — is a massive bonus.

The African model brutally pauperized the countryside, leading to the unchecked mass internal migrations that left Africa with the unmanageable slums that now take up the bulk of their bigger cities. In Taiwan and South Korea, the cities had to compete for people to want to migrate there. Internal migrants were, in relative terms, much more empowered, and much more to make the move with reserves of human and financial capital than similar migrants in Africa. This made them much more productive when they did reach the cities.

In the end, Taiwan and South Korea grew extraordinarily fast mostly because they got very good at making things in factories that people in other countries wanted to buy. But Taiwanese and South Korean industrialists pulled it off because they faced states that would not allow them to slack off, pulling in rents from farmers and wasting them on absurd projects. (That’s the “discipline” in Davis’s title.)

Her book influenced me deeply. I’m a true believer. If you want to do something for Africa’s cities, help farmers be more productive.

7 thoughts on “Why rural development comes first”

  1. Very stimulating post; I have no excuse for not reading Davis now.

    Today, on 20F, I was struck by her comment in the linked chapter that states which are institutionally autonomous (because they have an
    independent source of income) will devolve into rent-seeking and other predatory behaviour. She says that it will act with impunity and disregard if a challenge to this behaviour is mounted.

    If she is correct, Venezuela is probably a state of the nomenkultura or enchufados rather than of the “people” the poor, or the working class.

    So, question: which Latin American states does she analyze in subsequent chapters?

  2. Ha. I got bored looking for the home button on this blog. The home button is a standard on most blogs and helps ease of navigation of the blog. Also couldn’t find the the about button for who is behind the blog. Is that the point of the blog – bad design leads to boredom, mystery and ultimately lack of interest and failure. There are usually key words for quick reference on major topics of interest.

    But after you the fix the design of the blog it looks as if it has something valuable to say. Good projects fail because of poor design. Don’t make that mistake with this blog. Ouch! Nothing personal.

  3. I see your philosopy in FAQ. I would put myself exactly where you say you are but being a non-developer a lot of it is technical. However that seems to be your main target readership. I can try and sift things out from there.
    Like another blog from which I found yours – bottomupthinking – I found it immediately and refreshingly candid. Honest and real. Not enough of it going around.
    I hope to follow it with interest.

  4. This is too simplistic. If you help alleviate traffic congestion or one of the many other market failures in cities, that may very well end up helping farmers, for example because more productive urban migrants may send back home more money… There’s nothing saying that the focus should be squarely on one or the other. Also, you seem to conflate urban development with industrial policy, which is not strictly true.

  5. I’m still not sold.

    To bring a third book into the debate, the first two chapters of Jeffrey Herbst’s States and Power in Africa note a crucial difference between Sub-Saharan Africa and East Asia: that for centuries, the former was uniquely an area where land was so abundant as to disincentivise the mechanized investment in productivity (most vividly illustrated by the utilization of the wheel, but also notable in terms of land reclamation and tight rotation of crops).

    Fast-forward to the last few decades, and farmland in East Asia had a longstanding history of being a center of wealth (and therefore political power) in its own right in a way that was simply not the case in much of Sub-Saharan Africa. So we’re left with the situation that we’re aware that in East Asia, helping rural farmers helped the country develop. We’re aware that, when it comes to the complexity of farming techniques, much of Sub-Saharan Africa is still quite far behind where East Asia was even before its great improvement. And we know that residents of rural communities in Sub-Saharan Africa are itching to move to cities, or to move abroad.

    Now, perhaps really well-designed rural-improvement schemes (not like the villagization of Tanzania and Ethiopia, which we see with hindsight to be classic cases of development overconfidence, rural- and ag-focused though they may have been), fortified by RCTs, can, for the first time in history, overcome the Hayekian argument that it is impossibly difficult for centralized actors to know enough about an economy to craft it in the image of their ideal. Perhaps such schemes, building on boring but important successes at small, medium, or single-country scale, can shift the economic reality in Sub-Saharan Africa such that rural residents decide not to leave the farm after all, because the city now has less to offer them than staying put. How much are willing to stake on the outcome of these “perhaps”?

    (An aside here: large-scale urbanization is not limited to the developing world: it is a big issue in the United States as well, where suburbs are emptying, and metropolitan mayors are enjoying a fame and influence that has not been theirs since the Interstate Highway system was put in place in the 1950s. Ought we try at home what rural-development experts suggest abroad, and devote vast sums of money to trying to prop up incomes outside major cities so that they compete with incomes inside them, stanching this rising tide of migration? Think of all the rural projects that could have been paid for with Mike Bloomberg’s personal millions (to say nothing of the tax dollars) spent on making New York City a better place).

    I would argue that in Sub-Saharan Africa, some money definitely needs to go to improving rural quality of life, including incomes. But some also should go to improving life in the places where people increasingly want to live, rather than in trying to get them to change their minds about where to earn a living.

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