The Factor Contribution of Agriculture to Economic Development: A Study of Taiwan

Abstract

Economists are far from unanimous with regard to the role of the agricultural sector in early stages of economic development, but most agree that the agricultural sector can make certain contributions to the process of development. So far, little effort has been devoted to empirical studies in this area. An analysis of the Taiwan experience is pertinent because considerable success has been achieved, both in agricultural and in general development in the post-war period, despite limited resources, unstable prices of agricultural exports and a high ratio of population increase (3.6% per year). A UN study indicates that the average annual growth rates of GNP and national income were 6.9% and 6.1 % respectively during the period 1954-60. In the same period the per capita growth rate of national income was 2.7 %. Among Asian countries, only Japan exceeded these rates of economic growth.1 The main objective of this paper is to examine one aspect of agriculture's contribution-the contribution-to Taiwan's economic development in the post-war period. A factor is made if agriculture transfers resources to other sectors, and these resources are productive factors.2 There has been a tendency for countries in the process of development to underestimate the potential contribution made by their own agricultural sector. In considering the contribution of agriculture, Simon Kuznets points out an element of ambiguity: Since any sector is part of an interdependent system represented by the country's economy, what a sector does is not fully attributable or credited to it but is contingent upon what happens in the other sector, and perhaps also outside the economy.