5. Land Reform Comparison between Taiwan and Peru
5.2. Second Phase of Evaluation: Explanatory Factors
5.2.2. Explanatory Factors
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In the case of Taiwan, land reform provided the peasants with full ownership of the land. The guaranteed rights in their land encouraged the peasants to accept new technology and invest more capital in their land, which promoted the economic development of Taiwan (Chang, 1965). However, in the case of Peru, many of the small and medium farmers reduced their investment levels since they were afraid that the government would lower their land size and expropriate their property. As a result, the peasant did not make any kind of investment in their lands (Handelman, 1981).
Difference in Decision Making & Peasant Participation
In the case of Taiwan, the peasant participation was enhanced with a greater voice for the peasantry in local and national affairs through the committees that were established by the government, eliminating any kind of bureaucracy and allowing peasants to acquire control of the land in the form of family farms (Smith, 1973). In the case of Peru, even though the former permanent workers became into new owners, the technician of the government limited the peasant participation and decision making in the administration of the company, having usually a top-down chain of command (Schirmer, 1977).
5.2.2 Explanatory Factors
After explaining the cause of the difference in each indicator as a result of the land reform implementation in Taiwan and Peru, Table 2 will show a summary of the explanatory factors. As we can see, the difference in the indicator of “Income” and
“Decision Making & Peasant Participation” could be explained by the factor
“Institutions”. The difference in the indicator “Investment” and “Production” could be
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explained by the factor “Guaranteed rights and incentives”. And finally, the indicator of “Productivity” could be explained by the factor “State support in investment &
technical assistance”.
Table 2: Second Phase of Evaluation Summary Explanatory Factors
Source: Yu Kang & Schive (1995), Chen & Wang (1980), Koo (1966), Greenhalgh (1989), Chang (1965), Ho (1987), Chen (1961), Smith (1973), Janvry (1981), Wetering (1973), King (1977), Handelman (1981), Horton (1973), Chirinos (1975), Cant (2012), Eguren (2009), Schirmer (1977) and Gitlitz (1971).
Indicators Taiwan Peru Explanatory Factor
Production Increase in the agricultural output, due mainly to guaranteed ownership over the land.
Increase in the agricultural production for the cooperatives located in coast but not for the traditional communities from the highlands. The small
and medium farmer reduced its agricultural outputs fearing that government could lower their lands size
and expropriate their property.
Guaranteed rights and incentives
Productivity
Increase on the labor and land productivity, due mainly to the government support through
technical assistance and provision of agricultural infrastructure.
The formations of CAPS and SAIS did not produce any significant impact on land and labor productivity
since governmental support was not enough.
State support in investment
& technical assistance
Income
Increase in the income of tenant farmers, due mainly to the rent reduction program
established by the government.
Workers from the coast increased their income but not the traditional communities from the highlands.
The government did not provide fair norms and rules in order to incorporate the peasants from the highlands to the farmer associations, without obtaining any direct benefit from the land reform.
Institutions
Investment
An increase of long-term investments and improvements in land, due mainly to the new situation of the farmers, with the provision of
land ownership and a higher income.
Decrease in investment since small and medium farmers were afraid that the government would lower
their land size and expropriate their property.
Guaranteed rights and incentives
Decision Making &
Peasant Participation
Land reforms encouraged the emergence of a greater voice for the peasantry in local and national affairs through the committees that were established by the government, eliminating any kind of bureaucracy and allowing peasants to acquire control of the
land in the form of family farms.
Even though the former permanent workers became into new owners, the technician of the government limited the peasant participation and decision making in the administration of the company, having usually a
top-down chain of command.
Institutions Economic Indicators
Social Indicators
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CHAPTER 6 CONCLUSIONS
As mentioned in the introductory chapter, land reform has been an important instrument in order to promote the development of the economy in the East Asian countries, especially in the case of Taiwan. Usually, most of the literature had compared the successful Taiwanese case with another Asian country, however, the present thesis has presented a different case by comparing the land reform implemented in Taiwan with a Latin American country, since land distribution in this region has been so unequal and this inequality has caused land tenure to be the main obstacle to the development of this region. The decision to study Taiwan and Peru was because both economies share common characteristics. Both were under a one-party system and were agricultural economies during the land reform implementation. Therefore, the purpose of the present research was to investigate the effect of land reform in the case of Taiwan and Peru and to answer the research question: “Why did land reform work in Taiwan but not in Peru”, analyzing the possible factors that could contribute to the different results in both cases.
After studying the effect on the economic and social indicators in Taiwan and Peru, three main factors were found. These factors are “Guaranteed rights and incentives”,
“Institutions”, and “State support in investment & technical assistance”. Firstly, the factor of “Guaranteed rights and incentives” explains the different results in the indicator of “Production” and “Investment”. This factor is related with the Access Theory, which explains how having access over the land encourage peasants to invest and produce more in their lands since their rights are secured and can enjoy the full
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benefit of their work, as it was the case in Taiwan. Secondly, the factor of “Institutions”
explains the different results in the indicator of “Income” and “Decision Making &
Peasant Participation”. This factor explains how institutions are important in promoting the correct incentive to the peasants, through the rules and norms that institutions provide. If the institutions establish equal rights for the entire agricultural sector, it will promote that all peasants could benefit from the reform, otherwise, it will only generate partial benefit for some groups of farmers. Moreover, the factor of institutions also implies the limits that bureaucracy could generate on peasant participation and the obstacle of technocrats on peasant decision making, as it was the case in Peru. Finally, the factor of “State support in investment & technical assistance” explains the different results in the indicator of “Productivity”. This factor shows us the importance of the state intervention in supporting the new landowners in the early stage of farm implementation. The transfer of technology, through technical assistance, and the provision of facilities, such as irrigation systems and improvements in infrastructure for rural areas, are essential for the farmers to have a good performance during and after the land reform implementations.
So, in the light of the findings described above, the promotion of a titling and registration program in Peru could be useful in order to foster guaranteed rights and increase investments incentives for the peasants. Moreover, it is very important that government establish better institutions, in order to be socially fair and provide equitable budget on the agrarian sector of the coast, the highland and the jungle. Finally, according to Eguren (2009), a crucial condition for the long-term success of the Peruvian Land Reform is the workers 'alliance with the government, which requires both committed government workers, willing to go to remote areas to assist the peasants, and also competent peasant leaders.
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Currently, according to the Ministry of Agriculture of Peru, in the year 2017, agriculture was consolidated as the second economic activity, generating greater foreign exchange for the country. This result was due to the growth of agricultural exports, mainly non-traditional products, which registered an increase of 11% in their export value. In addition, traditional agricultural exports reached US$ 599 million; concentrating 13%
of total agricultural exports. The Ministry of Agriculture also highlighted programs such as "Sierra Azul", which ensures the supply of water for agriculture and populations, mitigating the effects of climate change and preserving resources for the following generations. On the other hand, regarding legal security over land; more than 34 thousand properties were integrated into the rural cadastral base; granting 18 thousand individual titles of property and 38 titles granted to native communities, which for the first time received a document that accredits them the property of the lands that they lead ancestrally. Finally, during 2017, the SERVIAGRO program benefited 255 thousand small and medium agricultural producers with business plans and market access, in order to increase their productive and entrepreneurial capacities of family farming (MINAGRI, 2018).
However, according to the World Bank, the current challenge of the agricultural sector is the improvement in productivity and competitiveness, in order to identify new opportunities and contribute to sustainable and inclusive growth objectives. The priorities for future interventions include the promotion of innovation, the development of human resources capacities and the improvement of access to markets, as well as the promotion of the land market and the facilitation of risk management. (World Bank, 2017).
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