From Marx and Mao to the Market: The Economics and Politics by Johan Swinnen, Scott Rozelle

By Johan Swinnen, Scott Rozelle

Learning agrarian transition in additional than 25 international locations from critical and jap Europe, the previous Soviet Union, and East Asia, this publication is the 1st attempt to research the economics and politics of the reforms in agriculture via evaluating the reform techniques, their explanations and their results throughout this giant region.

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6). 5 can be thought of as snapshots at different moments of the reform process. 6 summarizes key parts of the previous analyses. For example, before transition Socialist farms in Country 2 are subsidized, are allocatively inefficient, and are operating on the technically inefficient Socialist production function, f0(x). Hence, prior to reform they are at point B. With price reform, output declines and farms move towards the allocatively efficient point C. 6 Production allocations with a combination of various reforms and disruptions.

40 A Model of Agricultural Transition In other countries, the disruption effect may not be as large. For example, for a variety of reasons, countries with labour-intensive agricultural systems, ones that use relatively simple inputs and technology, the incentive effects may be strong and disruptions less severe. In such a case, there could be an overall positive effect. 4. The incentive effect increases output from qp (point C) to qp+r (point D), but the disruptions have a negative output effect, equivalent to the distance qp+r (point D) Ϫ qp+dЈ (EЈ).

Conditional profit maximizing occurs when the manager allocates inputs up to the point in which the marginal revenue of the farm’s output (which is equal to the government-set output price times the farm’s marginal product) equals the government-set input price. Although the profits of the Socialist farm are at the maximum point, given the government-set prices, if profits for the Socialist farm’s input and output levels were evaluated at market prices, it would be found that farm profits were lower.

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