Voluntary Rural Savings Capacities in Taiwan, 1960–70

Abstract

A large amount of attention has been given to mobilizing capital in and from rural areas of low income countries. In most cases, involuntary techniques such as taxes, price manipulation, forced labor, and expropriation of products have been used to do this. Rarely have policy makers considered voluntary techniques for stimulating rural savings. In part, this is due to the stereotype widely applied to rural savings behavior. This stereotype depicts rural households as having low incomes and very high consumption propensities. The lack of adequate household data on income, consumption, and savings has discouraged research that might test these assumptions (Mikesell and Zinzer). In the following, we provide information on rural household savings and some of its determinants in Taiwan during the 1960s. Taiwan is one of the few countries that has systematically collected farmhousehold data for a number of years that are rich enough in detail to allow such analysis. In addition, the agricultural sector in Taiwan has experienced rapid economic and social development over the past three decades. Overall, agricultural output has increased at a rate in excess of 5% per year since the early 1950s, while the value of agricultural exports has more than tripled. The benefits from this rapid growth have been relatively equitably spread (Oshima). Furthermore, Taiwan is one of only a handful of countries that has aggressively promoted mobilization of voluntary savings in rural areas. We will argue later that these positive policies toward voluntary rural savings, rather than frugal cultural characteristics, make the Taiwan experience almost unique with regard to rural savings mobilization.