INTRODUCTION: THEORETICAL FRAMEWORK AND IMPLICATIONS

Abstract

N Asian countries which have the potential for achieving self-sufficiency in staple foods, agricultural development is in a period of transition. Agricultural development in Asia since the 1980s has been characterized by the diversification of agriculture, and structural adjustment policies have been undertaken in many Asian countries during this period under the guidance of the World Bank [5] and International Monetary Fund. The diversification of agriculture is an inherent part of development strategy affected by structural adjustment and reflects the changing phase of development of the general economy. The optimum choice of crops for proper land use, the increase of agricultural production in parallel with the increase in demand, the production of agricultural products with higher value added, the processing of agricultural products, and their export promotion are some of the policy measures undertaken in the diversification of agriculture. All these measures prioritize the principle of market efficiency which is a basic idea in structural adjustment policy. The increasing concern about the market has also generated momentum to reform agriculture which has been substantially subsidized by the government budget. Thus, interest in the actual state of the market itself in each Asian country has increased. In this context, the private sector has drawn increasing attention because it will replace the government which has led agricultural development. The agribusiness and agro-industry are expected to contribute substantially to agricultural development. In order to support numerous agricultural activities, a large number of local traders is crucial as a primary agent for the establishment and function of the market. The aim of this special issue is to analyze the institutional arrangements within the traditional market system which is relevant to agricultural development in rural Asia. In Asian agrarian societies, economic transactions have been undertaken through the market, but these have not necessarily been well developed and organized. With the emergence of new goods or services as economic development progresses, a mechanism for their transaction needs to be created. To support their transaction, various kinds of institutions of transaction need to be created and consolidated because markets are not prepared in advance for the introduction of new goods and services. Institutions may not always function well; however, traditional institutions which have set down the rules of transaction can be invoked and adapted to carry out the transaction of new goods and services. Institutions and their arrangements are crucial in making a market function well.