What Really Fueled the ‘East Asian Miracle’?
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The transformation of several East Asian countries from developing, agrarian economies to highly developed, industrialized economies is one of the great success stories of the 20th century. According to one World Bank report, almost a billion people were pulled out of poverty as a result of fast growth in the region. But the questions of why this happened and how it can be replicated by other countries remain essential to answer for the roughly 700 million people trying to survive on less than $2.15 a day.
In today’s episode of Good on Paper, I talk with Oliver Kim, an economist working at Open Philanthropy, whose recent paper co-authored with Jen-Kuan Wang, a Ph.D. student at Penn State, investigates one country that was part of the “East Asian miracle”: Taiwan. In the 1950s, Taiwan pursued a series of land reforms that were widely credited for transforming its economy. Other countries in the region had pursued similar reforms—including mainland China, Japan, and South Korea—adding to the sense that these specific changes were important for understanding the region’s development. In broad terms, the story went like this: Taiwan redistributed land to the peasantry, which significantly increased the nation’s agricultural productivity and helped finance the country’s industrialization.
But Kim and Wang’s research casts doubt on this story. Diving into the data reveals a far more complicated picture of how land reforms spurred development in Taiwan, with implications for developing nations around the world.
“It is definitely true that Taiwan got richer during this time period,” Kim explains. “But you also have to remember from a critical historical perspective that this is playing an important propaganda role. And so a lot of Taiwanese historians, though they didn’t have the data that we have, have been questioning this narrative.”
He adds, “And actually, if you think about the experience of land reform more broadly in a global sense, I think our results actually bring the Taiwanese experience closer to the global experience, which is generally defined that land reform actually has been fairly disappointing in terms of its productivity impacts.”
The following is a transcript of the episode:
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Jerusalem Demsas: How does a nation pull its residents out of poverty and into the developed world? I think this is the most important question in economics, and it’s one researchers have struggled to answer.
To development economists, the rise of South Korea, Japan, and Taiwan, among others—what’s often called the East Asian miracle—has been a source of deep fascination. How did these countries so quickly enter the ranks of the global elite?
On today’s episode, we’re going to focus on Taiwan. How did this country go from a Japanese colony to an advanced industrial economy? And what lessons does it hold for other developing nations?
Over the course of the 1950s, Taiwan’s agricultural productivity took off, setting the stage for its transition to an industrial economy. Over essentially one decade, rice yields grew by more than 40 percent, unlocking a period of rapid economic growth. The traditional narrative is that land reforms are the key to development, particularly a set of reforms that redistributed land from wealthy landlords to the disaffected peasantry and thereby increased productivity.
It’s a nice story, one that puts equity and efficiency on the same side. But a new study casts doubt on whether this story is actually true.
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This is Good on Paper, a policy show that questions what we really know about popular narratives. My name is Jerusalem Demsas. I’m a staff writer here at The Atlantic, and today I’m joined by Oliver Kim. He recently co-authored a paper that is challenging deeply held beliefs about how development works.
His white paper shows that while redistribution of the land might have been a great policy on its own terms, when you dig into the data, it doesn’t explain Taiwan’s sudden burst of productivity. Other explanations make a lot more sense. We’re going to dig into them today.
All right. Oliver, welcome to the show.
Oliver Kim: Thank you for having me.
Demsas: So we’re here to talk about a very interesting new paper you wrote, but because it’s quite specific, I want us to step back a bit. There’s fundamentally one big question that development economics is trying to answer, and it’s: Why do some countries grow into developed nations where their residents are able to access high standards of living, and why do other nations fail to do so?
And one of the most important debates is centered on the divergence of East Asian countries like South Korea, Japan, and places like Taiwan from places in Latin America, Africa, and Southeast Asia. I’m hoping you can just situate us for a second back in the early 1960s. What was the state of these countries that we now think of as highly developed nations, at par or ahead of many Western nations, relative to what we consider developing nations today?
Kim: Sure. At the end of the Second World War—outside of basically Europe, North America, some other European offshoots—the basic condition in most of the world was poverty. And since then, in the present day, outside of basically if you’re lucky enough to find yourself sitting on a giant pool of oil, the only countries to really sustainably grow their economies to high-income status are really the East Asian tigers—Japan, South Korea, Taiwan, and then Singapore and Hong Kong.
So I think one of the central questions in development is, Why did this miracle happen? And one of the primary reasons that’s been put forward by economists and economic historians is land reform, which is basically redistributing land from landlords to peasant farmers. Right around the end of the Second World War and the beginnings of decolonization, all these major East Asian economies had large, sweeping land reform. Japan had one around 1947 under American occupation. South Korea, similarly, had one in 1950. And Taiwan had perhaps the largest and most sweeping land reform, which occurred from 1950 to 1958.
And the logic behind land reform is fairly simple. If you think about what most developing countries do—if you go and visit a developing country or area, what most people do to survive is: they farm, right? So I think in the present day—I think the latest stat’s from 2022—something like 40 percent of the world’s population are farmers. And this is where most of the extreme sort of poverty is.
In Asia, immediately in the postwar period, agricultural productivity went up in the 1950s and early ’60s. The most famous example is that in Taiwan, rice yields went up by 40 percent over the course of the 1950s. And if you think about the rural poor, this is a huge increase to their incomes. And so a very influential sort of view in economics is to try and connect these two things and say that land reform had something to do with the growth in agricultural productivity.
And so this was famously articulated by Joe Studwell in his book, How Asia Works. And the idea is that if you basically redistribute land—you take it away from landlords who happen to own a lot of it, and you give ownership to the peasants who actually work on it—you can improve productivity. And so you can get something that’s actually very rare in economics: You can get something that’s good for both equity and efficiency. And so the idea is that East Asia had these large, sweeping, major land reforms, and other developing areas in the world didn’t. And so this was a major contributor to the East Asian divergence.
Demsas: Okay. This story then is about landlords, and by that we’re talking about landlords of agricultural land. And so essentially, at the base, it’s just redistribution, right? You’re talking about redistributing land from these large landholders to people who are farming small hectares of land.
I’m hoping you could actually walk us through, more specifically, what this is, because I know land reform looks very different in different places, and we’re largely going to be talking about your research in Taiwan. So what was land reform there? What were the three phases? And which is the important one?
Kim: Yeah. Land reform is this big, amorphous term in development, and it means a lot of different things to a lot of different people. But I think most people would agree that the most sort of meaningful form of land reform is what you described, which is redistribution.
I guess the model you can have in your head is that in a lot of developing countries, there are these landlords who own a lot of the land, but they don’t necessarily work it themselves. And in the worst case, you have absentee landlords, who don’t even live on the land that they farm, and they have poor, oppressed peasants who are basically doing all the work and tilling the land. And the idea behind land reform—which I think is pretty compelling, at least on the face of it—is that you take that land, and you give the peasants who actually work it rights to that land. And in the most sweeping case, you give them ownership of that land.
And so in Taiwan, as you mentioned, there were several different phases of this. Just to set the historical background, Taiwan has this very unique political history. The government that runs Taiwan, the Republic of China, is basically an exile regime. And so you had Chiang Kai-Shek’s Nationalist Party, the KMT regime, that basically lose the civil war to Mao Zedong on the mainland of China, and they fled to Taiwan with something like a million of their supporters. And so this was a very sort of foreign regime that is almost a neocolonial setup, where they actually had very little ties to the local Taiwanese population, and they’ve just been kicked out by what was essentially a peasant revolution on the mainland of China.
And so you have this foreign regime coming into Taiwan, and they need to build their own domestic base of support. And they had this very recent experience where they were not very popular amongst the peasants. The KMT’s base on mainland China had been amongst landlords. It had been under urban elites. And so they needed to do something different, basically, to avoid getting thrown out a second time.
The first thing that they did was that they capped rent. So this happened in 1949. This is almost like rent control in a modern sort of rental sense. They capped the amount that these tenant farmers had to pay to the landlords. This is actually a fairly limited form of land reform, and it didn’t really do that much.
So the second thing that they did was: They just kicked out the Japanese, who had previously been the colonial overlords of Taiwan. And they took all the land that had previously been held by the Japanese, and they redistributed it to the peasant farmers. And that redistributed something around 20 percent of all arable land in Taiwan.
This still didn’t go far enough from a political perspective. And so the last stage, which ran from 1953 to the ’60s, is that they took any privately held land that was over a certain cutoff—this varied a little bit in terms of the quality of the land, but the most common cutoff was around three hectares for rice-paddy land—and they basically said, Any holding that is over that is going to get split up. So the landlord can retain up to three hectares, and then anything above that gets redistributed to the tenants who farm it. And these three phases collectively basically redistributed about a quarter of all arable land in Taiwan. And this ended up being, I think in a global sense, one of the most sweeping land redistributions in terms of the share of land that was redistributed.
Demsas: Yeah. You find that in all three stages—the three stages of land reform redistribute over 215,000 hectares of land. And for people like me who had to Google what a hectare was, that’s almost 2.5 acres per hectare. So that’s over 500,000 acres of land redistributed. So this is pretty massive. This is not some small amount of shift that’s happening here.
I appreciate you brought the historical perspective here, because part of the question that I had when I was learning about this is: Why didn’t the landholders become a political problem for the government, as well? There’s a lot of power that’s held by landholders. What did they compensate them with?
Kim: Yeah. So part of this has to do with the elite split that I was describing, where the KMT regime that comes over with a million followers—a lot of them who are soldiers with guns—they don’t feel a lot of connection to the local Taiwanese elites, the landlords there. And the KMT regime pretty quickly turns out to be very unpopular.
And so the Taiwanese actually rise up in 1947. It’s this deeply traumatic event in Taiwanese history called the 228 Incident. Local Taiwanese rise up. There’s a huge uprising throughout the island. They take over major cities. And the KMT, which still controls part of the mainland at this time, has to rush troops over, and they basically end up killing tens of thousands of people. This basically massacres a lot of the traditional Taiwanese elite. So that’s an important feature here, where there was very strong political and military coercion that essentially crushes what would be the nascent elite in Taiwan.
And so the split between the fact that you had this almost carpetbagger regime that came over, that had very little connection to the local Taiwanese—that enabled it. And there was some compensation that the KMT did. They did pay the landlords, in theory, for the land that they redistributed. But these payments actually, I guess, were not that economically significant in the final analysis.
Demsas: And so politically, this helps pacify the population. But that’s not the main mechanism by which most people think of land reform as having helped lead to the East Asian miracle, right? And it’s not just in Taiwan. As you mentioned, in the late 1940s, Japan and South Korea have similar land reforms. And in the 1970s, mainland China also has land reform.
And the mechanism is usually that land reform leads to greater agricultural productivity, right? So then you get a ton more productivity. That kind of output growth spurs the ability for people to move into manufacturing sectors. Is that the story? Can you break that down for us?
Kim: Yeah. The traditional story, which was famously articulated by Joe Studwell, is that land reform boosts agricultural productivity. And there’s a number of different mechanisms by which this can be true. But the most common one is that as you shrink the sizes of farms, paradoxically, yields—which is agricultural productivity over a unit of area, so the amount of stuff that you can grow over a hectare of land—that tends to go up.
And this is a deeply disputed sort of relationship in economics. There are a lot of advocates on one side. There are advocates on the other. But the historical view is—at least, in East Asia, in Taiwan and Japan—breaking up these land holdings that the landlords previously held and giving them to tenants had this effect of raising agricultural productivity.
And what my research basically finds with Jen-Kuan Wang (we’ve recently released this working paper) is that if you actually digitize the data—and this hadn’t been done before—but if you actually go into the Taiwanese archives, and you look in a very straightforward way at what actually happened in townships where there was more land reform, do you see more agricultural productivity growth? Do you see rice yields go up more?
We actually don’t really find a lot of strong evidence that was the case. So what we find, basically, is that in areas where there was more of phase two of the land reform—so remember, that’s where you redistribute the previously Japanese-held public land—in areas where there was more of that public land redistribution, you actually do find some small effect on rice yields. So rice yields go up by around 6 percent over 10 years as a result of this phase two of land reform.
Demsas: Is that because they’re converting things from sugar to rice?
Kim: Yeah. The idea there, basically, is that these are previously colonially held lands. The Japanese were previously mandating that you grow sugar. This was essentially feeding the Japanese empire, in a large sense. And once you lift that constraint, and you make farmers free to grow what they want, they choose to plant rice instead of sugar. And this is a classic economically liberal argument, but: You give people the freedom to choose, and they make more efficient decisions.
But the reform that everyone tends to focus on more—because it’s very rare, actually, that you have a case where you have a colonial overlord that gets kicked out, and you can redistribute their property. That can only usually happen once. The case that people typically fixate on in the case of Taiwan is phase three of land reform—this redistribution. And this obviously has a lot of resonance in present-day debates whenever there’s a lot of inequality in the world.
And the idea was that, basically, by taking land away from these landlords who own these larger estates, and you give them to these peasants, you boost agricultural productivity. But when we look in the data, when we go into the township-level data, and we run regressions on the stuff, we actually really can’t find this effect.
Demsas: So much really good economics is just in the data, right? It is in finding and cleaning data, actually going and testing theories. And one of the things that you make clear in your white paper is that this theory had not been tested by looking at the actual records on the ground in Taiwan. So can you walk us through what you did there and how you found that? Did not have access to this before?
Kim: Actually, it is a little surprising that this hadn’t been done before, because a lot of this was actually just sitting there. My co-author—I mentioned who I wrote this paper with, Jen-Kuan Wang—is Taiwanese, and he did a lot of digitization work, going into the government data archives. But the basic work, the initial regressions that we ran, actually it was just a book I pulled from the UC Berkeley library.
Demsas: What was the book?
Kim: The book was—they actually had, at the township level, the land-distribution statistics. So they had for each township in Taiwan, you know, How many people own plots that are between, like, zero and 0.5 hectares? Between 0.5 and 1 hectare? etc.
And so this very sort of commonly held story that this phase three of redistribution, that land-to-the-tiller reforms boost agricultural productivity—it doesn’t actually seem to be the case. And one reason that we hypothesize is, basically, that the farms that this created were just too small, actually, to be economically viable.
And so if you actually think about the context here—Taiwan is actually a pretty small place—the initial land holdings held by these landlords were just relatively small, and they just got broken down to an even smaller extent, to something like 0.2 hectares, which is, I think, less than an acre.
And these are just too small to support a growing family. And this had the perverse effect, basically, of pushing labor out of agriculture and into industry because these farms are just too small to support the families that were living on them. So this is very different.
Demsas: So people sold their land and moved to the city?
Kim: They often kept it, basically. In a lot of developing societies, I think there’s a lot of attachment to the land as a form of security, but it was just not enough to provide enough income to support a whole family. And so you had people leaving agriculture and starting to pursue part-time or even full-time employment in manufacturing, and that’s maybe related to the broader sort of transformation of Taiwan that people typically think of when they think of the East Asian miracle.
Demsas: And I want to ask you first: Were you surprised by the results of your study? Or did you expect to find productivity growth?
Kim: Yeah, I did. I mean, people on Twitter and stuff have been like, Oh, there’s been a lot of fighting, over, like, Oh, what this means for the Joe Studwell book, but like, Oh, this was an attempt to take down How Asia Works.
But I actually really like that book. And I was motivated to do this because I really did believe the story that land reform is good for productivity, and it had all these sort of positive effects on East Asian development. So yeah, I did go into this expecting to find a very strong result of land reform. So it was surprising to say the least.
Demsas: Okay, cool. I also enjoyed the Studwell book, so I’m glad I don’t have to throw that one out.
So there’s this question about whether small farms would be more productive than big farms, which is actually really, really important. In general, you would expect there to be economies of scale that come with bigger farms: You’re able to diversify your crops more in case of a problem. You’re able to invest in productivity-enhancing technology, whether that’s irrigation or whatever it is.
At some level, do you feel like the original land-reform story felt suspicious on face?
Kim: Yeah. So one thing that’s very interesting, particularly if you dive into the Taiwanese literature, is that local Taiwanese scholars are very skeptical of this story. And I brought up this political context, right? There’s a split—the KMT come in; they’re this foreign regime. This was a very brutal authoritarian regime. In a modern sense, this was an autocracy, right? And they need to build their local base of support, and so they play up this idea of land reform being this benevolent policy that was so good for the Taiwanese people, because it suits their interests, right?
Part of that might be true. It is definitely true that Taiwan got richer during this time period. But you also have to remember, from a critical historical perspective, that this is playing an important propaganda role. And so a lot of Taiwanese historians, though they didn’t have the data that we have, have been questioning this narrative and have been pointing to examples of the fact that, Hey, a lot of these farms were actually really small. A lot of people were actually pushed off the farm. Maybe the sort of miracle doesn’t have actually that much to do with KMT policy.
And so, yeah. I think adopting this critical historical perspective and saying, Hey, something about the story doesn’t seem quite right. And actually, if you think about the experience of land reform more broadly in a global sense, I think our results actually bring the Taiwanese experience closer to the global experience, which is generally defined that land reform actually has been fairly disappointing in terms of its productivity impacts.
Demsas: And I think that brings me to this broader observation that I’m hoping you can expand on, which is that so many debates about development, especially development—these are obviously developing nations—are being shoehorned into debates that are happening in Western countries about what sorts of economic policies are better.
And so in some ways it seems like there’s this larger debate about whether industrial policy, whether the government intervention in the market is an appropriate way to get to development. And then you have folks on the other side— the Washington Consensus, the more neoliberal economists—who are saying, No. We want free and open trade. We don’t want government intervention. And the industrial-policy people really, really like this land-reform story because it shows that there is a role for government to be intervening in the market. Is that how you see it, too?
Kim: Yeah. I think there’s always a bit of a danger from trying to transpose lessons in developing contexts to developed contexts, right? They’re deeply different in very fundamental ways. On the industrial-policy stuff, the example that everyone likes to bring up is: South Korea did a ton of industrial policy and experienced this massive developmental miracle, right? So there was massive intervention. The state heavily subsidized certain sectors—like steelmaking, like auto production, like shipbuilding—and then created these very successful industries and very successful firms that were able to compete on the global marketplace.
And I think there’s a real strong sort of temptation to try and take that logic and apply it to things like CHIPS [and Science Act] in the United States. I’m not saying, necessarily, that’s wrong. But you have to remember that the context in which Korea is implementing these policies is very different than what the United States is trying to do. Like, Korea when it was trying to build its domestic steel industry, or if you want to lump agricultural policy, so like Taiwan when it’s trying to develop its local agriculture—these are not new, frontier industries. These are not at the technological frontier.
You broadly know that you should be growing more food. You broadly know that a developed country, at least in the ’60s or ’70s—the hallmark of being a rich country is that you make your own steel, right? It’s not a mystery. Especially in Korea and Taiwan, which were former Japanese colonies, you can look over the water, and you can see your former colonial overlord, Japan, that’s doing pretty well economically by developing its domestic industries, doing all this industrial-policy stuff. And so it’s fairly simple to mimic that policy recipe and try to develop an industrial mix that catches up to countries that have already reached the frontier.
With things like CHIPS and modern industrial policy or things like electric cars, it’s much more difficult to have a guide in that sense. It’s unclear what the hallmarks of a highly rich society in the 21st or 22nd century is going to look like. So I think there’s a fundamental difference there. When you have the playbook and you have clear sort of historical examples—economists call these demonstration effects—when you have a demonstration effect that you can point to, the problem of what industrial sectors to prioritize becomes a lot easier.
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Demsas: All right. We’ll have more with Oliver after this break.
[Break]
Demsas: I want to step back broader and talk about why this really even matters. One mechanism that you guys are really undermining in your paper is the idea that land reform led to the East Asian miracle by increasing agriculture productivity.
But you hinted at this already, but there are other ways in which land reform could have helped propel Taiwan, South Korea, all these other countries into becoming a developed nation, into these high-GDP-per-capita countries. I’m hoping we can talk through some of those, because the elimination of that one causal pathway doesn’t actually mean we can say land reform isn’t important for understanding Taiwan’s or other countries’ pathway to development.
So I guess one pathway, which you hinted at, is a sort of political pathway, that you’re able to pacify the population of peasants who have already had this really, as you mentioned, traumatic uprising, have martial law now imposed, but you need to actually make sure that they’re not going to overthrow you. And so it staves off political demands for communism. Is that a pathway that you think is super valid for understanding what happened here?
Kim: Yeah. I think that’s central. I think you can’t really understand the history of East Asian development without understanding the fact that this all is happening in the context of the Cold War, right?
So I mentioned that Japan, South Korea, Taiwan all had these land reforms. These are all non-communist countries. But if you look at the map of East Asia, and you put the dates of land reforms across all countries—not just these three—on a map, you’ll notice there’s this kind of mirroring pattern. Japan has a land reform in ’47, but China also has one from ’45 to the ’50s, as Mao’s Communists take over. South Korea has one in 1950, but that’s because North Korea has one a couple years earlier.
And so the motivations, I think, are fairly obvious, which is that these are poor societies where most of the people are farmers, and across the border, in a lot of cases, you have very viable military threats, which are doing actually fairly popular programs of land redistribution that build up the support among the peasantry.
And so this is a very unique circumstance where the United States supports a lot of these very strong redistributionary measures in order to basically forestall the possibility of communist takeover. And this is not the kind of thing that’s very easy to do in a regression, like a formal statistical sense, but just knowing the historical context and the narrative of this history, it’s hard to see how these regimes could have survived without at least doing some form of land redistribution, at least building up some support amongst the farmers that made up the majority of their population. If these regimes had failed to survive, and they’d been swallowed up—let’s say Taiwan had been consumed by mainland China—you wouldn’t be talking about an East Asian miracle, probably.
And the exception that proves the rule is South Vietnam. So people forget that there was this other kind of American proto-colony in Southeast Asia. Just like Korea, Vietnam gets divided into two. There’s a communist northern half. There’s a capitalist southern half. And for particular reasons, the South Vietnamese regime basically avoids doing systematic land reform. And the American government very famously spends a lot of effort, blood, and treasure in this horrific and tragic war, which is called the Vietnam War, basically, trying to solve through coercive means what ultimately, I think, is an agrarian and a peasant sort of revolt. And part of the problem is that the South Vietnamese regime is beholden to the landlords. It’s a landlord-led government. And they’re not particularly interested until very late in the war in doing large-scale redistribution, because that’s where their wealth is tied up.
And what basically happens, of course, is that the South Vietnamese state gets hollowed out. It ultimately falls to a conventional invasion from the North, but it’s hard to argue, I think, that if they hadn’t done land reform earlier, they might have continued to exist. And failing to have done systematic land reform basically results in the regime failing to survive. And I think the East Asian states that did successfully do land reform avoided this fate.
Demsas: Okay. It sounds like you place a lot of value in that story. But as you mentioned, Joe Studwell, who writes How Asia Works—he has a few other pathways that he also theorizes. One is that landlords are forced to go do more productive things than just rent seeking. Previously before land reforms, you’re a landlord, you have a bunch of money, you have peasants working the farm, you get to raise your rents really high, and you have no incentive to really invest in that land and to increase productivity, because you’re just making a lot of money by just collecting those rents and not having to do anything else. Once your land is forcibly redistributed, in order to—you want to still be rich? You want to make money? You have to go do something more productive. Do you find that to be a valuable way of thinking about this?
Kim: Yeah. We’ve tried to find evidence for this. So the story in Taiwan is that, in compensation for the land reform, the landlords were compensated by the state, either in the form of land bonds, which basically is a claim on agricultural output. So I don’t know—you’re entitled to some number of kilograms of sweet potatoes in the next five years or something like that. My understanding is that those actually turned out to be fairly worthless.
And then the second thing that landlords were compensated with were shares of industrial companies. So Taiwan had a little bit of industry that had been leftover by the Japanese. The KMT state claims it, and they give shares to the landlords. And I think this is a little bit of what Joe Studwell is gesturing at. I’m a little bit more skeptical that this is as developmentally important, because one of the things that happens in Taiwan is that a lot of the growth in manufacturing—there is growth on the state-led sector, but the really most dynamic kind of growth-leading sectors of the economy are small-scale manufacturing.
And so these don’t really have much to do with the former—like, these lumbering, large-scale industrial enterprises that the government had redistributed these shares of. It’s more these new enterprises that sprout up in the countryside. And so that, I think, is maybe evidence against this view that it’s the landlords, in particular, who are the importance of entrepreneurs in development.
Demsas: Okay. To recap land reform: Your belief is that it largely is operating positively for growth by staving off communism and, potentially also, the low yields lead people to work more manufacturing. But you don’t really believe that there is some large productivity increase that comes from redistributing the land to the peasantry.
Kim: Yeah. That’s right. And I think this helps reconcile a little bit Taiwan with the global historical experience, right? It wasn’t unknown that South Korea and Taiwan did this. Throughout the ’70s, there were actually a lot of attempts at land reform in Latin America, elsewhere in Southeast Asia.
Now, there are a host of different reasons that this didn’t work. Often, as I mentioned, as I alluded to, in the case of South Vietnam, for political reasons, a lot of these land reforms ended up getting co-opted. But even in the instances where there was genuine redistribution, there just never were sort of the claimed productivity effects that you saw, or at least you claim to see, in South Korea and Taiwan.
And at least in the Taiwanese case, the study brings Taiwan back into line, I think, with the rest of historical experience. It’s not to say that agricultural productivity didn’t go up. Clearly, Taiwan got richer. Rice yields went up. But I think the balance of explanations and how much explanatory power you want to put on land reform versus more prosaic things—like the fact that there were, you know, improvements in fertilizer use, the fact that there were the development of higher-yield varieties sort of presaging the Green Revolution—these sort of more prosaic, technical developments probably are more important than this sort of very flashy, large-scale institutional change of land reform.
Demsas: But I also want to take a step back from land reform in particular, because in general, if you are downgrading the importance of one explanation for East Asian development, then you should be upgrading other explanations for East Asian development, right?
So I wanted to talk about some of the other reasons people often have for why nations develop or why nations fail, to quote Acemoglu, and see what you think of it now that you’ve done this study. Okay, let’s start with export discipline. Can you explain what that is and whether you feel more confident that it’s a reason for East Asian development?
Kim: Yeah. The idea there, basically, is that when you think of the East Asian countries, you typically actually think of manufacturing development. There’s actually this Calvin and Hobbes comic, I think from 1980s, where Calvin asked Hobbes to check the tag of his shirt because it says where he comes from. And Hobbes checks the shirt, and it says made in taiwan. It’s like he came from Taiwan.
I mean, the idea that Taiwan was making shirts back in the ’80s and now is doing things like TSMC and making microchips—that’s a tremendous transformation. But the common thread throughout this stuff is that it’s about making physical goods, industrial production that gets exported abroad. And the idea with export discipline is that there was a lot of industrial policy throughout the developing world throughout the ’60s and ’70s. And it was actually the policy consensus that the state has to do things to foster development.
And Joe Studwell’s argument in How Asia Works is that the differentiating kind of factor for the East Asian economies was the fact that they actually forced their big sort of industrial champions to export. And this basically disciplines the firm when a firm can just stay in the domestic market. So imagine you’re surrounded by big, tall tariff barriers; there’s really no incentive to innovate or to try and become more efficient.
Demsas: You have a captive audience.
Kim: You have a captive market. You have a captive audience. And in the comparative sense, this is what a lot of scholars view happened, for instance, in South Asia and India, in a lot of Latin American countries, where you had initially very well-intentioned policies, where it’s like, Okay. We want to foster an infant industry. We want to get industrialization going. To support that industry, to prevent it from just being strangled in the cradle, we need to have all these supports. We need to put up tariff barriers. We need to subsidize credit, all this kind of stuff.
Demsas: To make it easier for these industries not to have to compete with—
Kim: Yeah, to make these industries grow and to get them to a sufficient size that economies of scale kick in.
This is a very standard kind of economic argument, and it’s actually fairly sound. The problem is the political stuff, which is that once that firm is born and grows a little bit, it starts to create a constituency that actually really likes to have these barriers. It’s really nice to not have to compete with all these scary, big foreign firms that are potentially more efficient than you are.
And so the view is that what happened in South Asia and Latin America is, like, a lot of these controls and these barriers stayed up, and the firms are never forced to export—unlike, for instance, the Hyundais and Kias of the South Korean experience. In other countries, they never developed the productivity enhancements to become globally competitive, and so you didn’t have the sort of miraculous growth. I think this view is basically still pretty sound.
Demsas: So I think the more-popular ones that people generally tend to hear when they think about development and why it happens are these temperature and education explanations for development. So: Hotter places don’t develop well. And also, people should just invest in education. That’s why the East Asian tigers do so well, is because they have such well-educated populations. How do you think about those explanations?
Kim: Yeah. The temperature one is interesting. I think that goes back to Montesquieu or whatever.
Demsas: Yeah. It’s an old one.
Kim: Yeah, like, tropical. There’s always a little bit of, That’s a little suspect, in there.
Demsas: Oh, yeah.
Kim: I mean, Taiwan is pretty hot. Singapore, which I grew up partly in, is really hot. I don’t think there are very many economists who would seriously defend it. In a more analytical sense, Taiwan, Singapore, Vietnam, which is growing very quickly—they’re tropical climates, essentially. And so I don’t think that climate can necessarily be, like, the best explanatory sort of variable there.
The second one that you mentioned is education, right? Which I think is still very live as a hypothesis, right? And so the idea is that maybe because of cultural factors, like the sort of legacy of Confucianism, this legacy of meritocratic exams in these Confucian regimes, East Asian cultures valued a lot of education. And so that carried over to the modern period, where the educational attainment was relatively high. I think that education is obviously really, really important. I think it’s important from a rights basis. As an individual, it improves your earnings.
It’s a little bit more unclear to me how this works out at a societal level. So when you move from the specific, the micro, to the macro and the aggregate, this is a huge live debate in the development literature—how much, actually, educational attainment has gone up in the developing world.
Clearly, actual growth experience has been kind of disappointing, especially over the past four or five years. At least on paper, there have been a lot of reforms—understanding the East Asian experience, trying to apply it—there have been a lot of reforms trying to promote free primary education, particularly in sub-Saharan Africa. There’s at least a lot of rhetoric from governments that they should be prioritizing education. Whether that has actually translated into increases in learning—like the actual test scores, for instance—that is a huge open question. And I don’t think there’s very good sort of international data, particularly from these very poor, developing countries, to understand how much these test scores have gone up.
There is also a lot of political incentives. I think Justin Sandefur from the Center for Global Development has an interesting paper showing that when Western donors attach a lot of conditions, basically, to—let’s say you want to hit certain targets in vaccination rates or something like that—the official government data goes up a lot, but when you actually do a survey, it doesn’t show that much of an increase.
So there’s a lot of reporting incentives, also, to say that educational attainment goes up a lot. So that’s just a very long tangent to say that I think there’s a strong case to be made that this was an important component of success in East Asia. Whether it’s on its own enough to explain stuff, and whether it can explain growth in development more broadly, in a global sense, the jury is still out on that.
Demsas: And then, the last one is sort of—I mean, the Why Nations Fail is the big developmental econ book that gets popular amongst noneconomists, too. And to oversimplify Acemoglu’s thesis here, there are these inclusive institutions that make development possible. Part of why I think that framework can be helpful here is that when you think about why a country is able to pursue or willing to pursue land reforms or is not able to or willing to pursue it—even if they have a lot of the information, there’s a level at which it’s almost like, Yeah. There are places where people can pursue good economic policy for kind of amorphous institutional reasons. And that’s very, very hard to isolate as a thing that you can tell countries to do.
Kim: Yeah. This is sometimes phrased a little bit pejoratively as the “get a better history” kind of view. Which is that, Oh, there are these long-standing, almost fundamental historical differences that determine your economic destiny. And there’s very little that you can do about that. Obviously, history matters. Countries don’t just drop out of coconut trees. They exist in the context that came before them, right? But history is not everything.
There was scholarly work, for instance, done about China and Confucian societies in the 1950s with the view that’s very different from today, which is that Confucian societies are actually not compatible with modern economic development.
So if you’re taking the vantage point of somebody from the 1950s, you just see in Chiang Kai-Shek’s regime collapse on the mainland, it’s not even like Korea and Taiwan are doing particularly well in a global sense. Like, the miracle stuff is sort of very nascent. And so it’s a very rational kind of response, as a sociologist, to say, Hey. Maybe these Confucian regimes are just not very good at adapting to the modern world.
Fast-forward 30 years, you have Lee Kuan Yew, the prime minister of Singapore, making a very forceful case globally, going around to different countries and saying, Hey. The reason you’re not doing well is because you don’t have Confucian values. Confucian societies—we value education. We’re more respectful of the government. We’re more organized, all this kind of stuff.
And so I think a lot of these more-ingrained cultural and institutional factors are actually not so ingrained when you take a broader view of history. They’re more malleable than people can make them out to be. And so there’s always this game that you can play about, Are institutions inclusive? Or are they exclusive?
So a first approximation looking at Taiwan in the 1950s, this period, which we’ve been describing as the period where the miracle is laying down roots, this is an autocracy. This is an authoritarian, right-wing, military dictatorship. This is not like a democracy where—actually, the other famous example in How Asia Works and in the history of development is South Korea, which we know is the example of a miraculous country.
One of the first things that happened under the dictator Park Chung Hee was that he took a lot of the prominent capitalists, and he threw them in prison. And he basically threatened to confiscate their property unless they started to dedicate their resources to the goal of national development. And throughout this period, there was a lot of state intervention in the economy. And so this just, prima facie, does not sound like inclusive institutions in the “democracy is good” kind of sense.
This is not to condone dictatorship and autocracy as a route to development, but it’s just saying that history is complicated, and, like, our views of this stuff kind of change depending on our vantage point. And I think it’s, maybe, a little bit of a blind spot to think of these things as too fixed, and they can move around, and there are opportunities I think that exists for nations to reshape their economic destinies.
Demsas: And so what’s really important about your paper—and I was reading through some of the other economists that have really focused on land reform in explaining East Asia’s divergence from Latin America or other countries or Southeast Asia—it’s almost like other countries have this template. They need to do land reform, and then they can develop. I wonder if you can talk to us a little bit about: Why wasn’t it possible for other countries to pursue this? And do you think that if they had, they would have gotten the benefits? Or is it kind of like, this is not the one-trick pony for development?
Kim: Yeah. So I think the political factors are really important to foreground here. There’s a scholar, I believe at the University of Chicago, called Michael Albertus who has a great book called Autocracy and Redistribution, which I think of as the canonical theory of, Why does actual, large-sweeping instances of land reform happen? And the answer that he basically gives is that land reform occurs when there’s a split in the elites, right? So as I mentioned, this is a fact you should always bear in mind.
What Albertus basically posits is that what you need to happen is that there’s a split in the elites. And so you have one group that advocates for reform and then separates from the landed class. And so this is what happened in East Asia, right? So I mentioned Japan and South Korea had these land reforms. Well, who actually implemented the land reforms? It was the American Army, in essence, occupying these countries in the aftermath of the collapse of Japan after World War II. In Taiwan, it was less an American military presence, but it was actually, again, this foreign KMT regime that didn’t have very close ties with the local elites that was free, basically, to impose a land reform through this essentially autocratic, authoritarian means.
And so there’s this weird kind of thing where, actually, authoritarian regimes—Albertus points out—are actually, in a lot of cases, more likely to engage in land reform because they have the capacity and the willingness to disempower and remove property from the main political class, who in a democracy might actually have more of a voice.
Demsas: Yeah. That reminds me of my favorite economist and philosopher, Amartya Sen, who has a book called Development as Freedom. There’s this larger debate where people talk about whether or not democracy or authoritarianism is going to lead to economic growth. And what Sen points out is that the ends of economic growth are freedom, whether it’s freedom from hunger or thirst or whatever it is, but those are just basic political freedoms.
People are wanting to have access to these basic goods—whether you’re disrespected inside, or you’re not going to be murdered on the basis of immutable characteristics or treated differently by your government—and so not treating democracy as, Oh. Well, authoritarian government might get you closer to having a higher GDP. But people also care about basic freedoms. And so I always think that that’s an interesting—
Kim: Yeah. That’s right. And also, Sen has this view of—it’s called the capabilities approach. What matters, basically, is, you know—it’s not necessarily just wealth or income; it’s what that wealth or income enables you to do and what sort of agency it gives you.
And I think that’s also a framing with which to view the land-reform stuff, which is that even if it didn’t necessarily have the claimed productivity impacts—so both having this equity boost but also this efficiency boost, so having your cake and eating it too—it’s enough just to have the equity boost.
Demsas: Yes. Exactly.
Kim: You made society more equitable. You gave a lot of very, very poor peasant farmers a little bit more security. You gave them control over their land. This is something that, politically, they’d been advocating for and fighting for for a very long time.
I think a lot of people on Twitter and elsewhere have been trying to read the paper as, Land reform is bad, or, Joe Studwell is wrong. I think that’s maybe too much of a simplification. Giving the poor more land is, I think, a pretty good thing in itself, and you didn’t actually lower productivity as a result. So I think the view is maybe a little bit more ambivalent than the triumphalist sort of narrative. But I think land reform should still be on the table.
Demsas: Well, we have one final question for you, which is: What is an idea that you initially thought was a good one but ended up only being good on paper?
Kim: Like a lot of people—maybe who are listening to this podcast—I got pretty involved in political-betting markets around 2016 or so. And I was peak econ brain at this point in time. One of the first things you learn if you’ve taken a little bit of intermediate micro[economics] theory is that conditional on the probabilities, you want to equalize your marginal utility across different states of the world. And that’s just a very nerdy, complicated way of saying that you want to hedge your bets, right?
And so when it comes to political-betting markets, I imagine like a lot of people listening to this podcast, I have very strong preferences about the outcomes. And so in the 2016 election, I put it as a small bet—like $25 or whatever—and Donald Trump as, like, as an emotional hedge, basically.
Demsas: So that if Hillary Clinton loses, at least you have some money.
Kim: Yeah. Exactly. You feel a little bit better about yourself. And in Homo economicus logic, this makes a whole lot of sense on paper. And I fully expected Hillary Clinton to win, just like a lot of people did. And of course, she loses. And I get my little, dinky payout, and I don’t really feel a lot better about myself. In fact, I feel a little bit dirty in having—
Demsas: How much money did you win?
Kim: I don’t remember. It was on the order of $30 or $40. It was not a whole lot of money. But yeah, it just didn’t feel good relative to how horrible those months were. So I think, yeah, there’s a sense in which the Homo economicus model is missing something. So that’s something that’s maybe better on paper than it actually is in reality.
Demsas: Well, we would need a randomized controlled trial here to see if you would have felt even worse if you hadn’t had the $30. So it seems unclear.
Kim: Yeah. Maybe. Maybe.
Demsas: Thank you so much for joining the show, Oliver.
Kim: Yeah. Thanks. This was a lot of fun.
[Music]
Demsas: Good on Paper is produced by Jinae West. It was edited by Dave Shaw, fact-checked by Ena Alvarado, and engineered by Erica Huang. Our theme music is composed by Rob Smierciak. Claudine Ebeid is the executive producer of Atlantic audio, and Andrea Valdez is our managing editor.
And hey, if you like what you’re hearing, please leave us a rating and review on Apple Podcasts.
I’m Jerusalem Demsas, and we’ll see you next week.