UNITED NATIONS CENTRE FOR REGIONAL DEVELOPMENT REGIONAL DEVELOPMENT SERIES Edited by M. Honjo and R. P. Misra Volume 5: Rural-Urban Relations and Regional Development Edited by Fuschen Lo. The contents of this volume ase drawn from country reports and seminar papers pertaining to UNCRD reweatch projeet on Rural-Urban Relations and Regional Developaies Opinions expressed in various sections of “his volume are dhase of the authats and do tint ier essai refieet those of ce Uivred Nations Secretariat or of the Unite Natinns Centre for Regional Devellspment Designations employed ond presentation uf raaterial in this publication do nes the exp ler othe past of the United Nations aariat or the Uniced Nations Centre for Regional Develapme fof any country or territory. vty or area, or af its authorities, oF cow g the delimitation ofits frontiers or boundaries RURAL-URBAN RELATIONS AND REGIONAL DEVELOPMENT Edited by FU-CHEN LO Wath the assistance of JS, Edralin & N.T. Dung MARUZEN ASIA For and on behalf of the United Nations Centre for Regional Development2 i RURAL-URBAN TRANSFORMATION IN ASIA FU-CHEN LO, KAMAL SALIH & MIKE DOUGLASS URBAN AND RURAL INEQUALITY AND POVERTY ‘THE PARADIGM of industrial-led growth which has dominated develop- °) ment policy for more than two decades contained a paradox: although / average per capita Gross National Product (GNP) increased at rates in some cases even greater than targets set by national and international / development authorities and experts, the increasing aggregate welfare) failed to automatically “trickle down” beyond the modern industrial sector or over space, and has had litle or no benefit to perhaps one-third of the population in the ‘Third World." This polarization of development has raised again the crucial question of whether the majority of the population — both the urban and rural poor ~ have or can be expected to benefit from the type of development pursued through adopted policy ‘The dissatisfaction with the outcome of the urban-based indus trialization strategy has in recent years generated new approaches and altermtatives in development planning. The meaning of development has been reconsidered by asking how it might be inclusive of the majority of people as a process rather than as a result of an over-simplified distinction between growth and equity and its implied grow-first, distribute later policy which cannot automatically reach the majority of the people. This central concern underlies the alternatives being revived and generated in current development literature on self-eliance, basic needs, the “Chinese 1 Ht, Chenery, et a., Redittrsbution with Growth (Washington, D.C.: IBRD. 1974), “taero duction”. BD. Macaweit, Twenly fice 9/27 of Economie Development (Washington, D.C THRD. 1973), The simplified viewe swerated withthe single development path, saverced U: shaped curve ofinhial increases followed by decreatesin neqeatiigt — the so-called Kusnet > hypothesis ~ have thas been questioned by thore mo se the uaues in structural rates thao snigromth terms and who declare the pathology of poverty” to be a product of du monopolies amet distibution and the low labour absorptive capacity of madern indus G'Meiess. Employment, Trade and Development (Geneva: Institut Universitaire de Hautes Frades Internationales, 1977)8 LO, SALIH & DOUGLASS i model”, ecodevelopment and “another development’.* In composite, these Table 2-1. Gini Coettcients of Income Inequality and Per Capita GNP concepts share the position that in considering policy options to reverse Selected Asian Countries, patterns of uneven development, growth and equality are inseparable.? ‘ Tai oe Gove ae The changing paradigm of development, to be compelling, rests i ne onan a heavily on the evidence of disparities in the Third World. In particular, a F ex canion yas) question in need of answer iswhether inequalities are increasing and, if so, ‘Suthast Aaa ws whether this is resulting in a relative or even an absolute worsening of the intnesia oss % n position of the lower income groups. Although data is limited to a number | mw & of selected countries in Asia and its reliability can be questioned in many Mate we 8 a 8 instances, trends and patterns of uneven development, urban and rural, se = can be traced in this section — La * » Table 2-1 presents what has become a classic measure of distribu es i tion: Gini coefficients of income inequality and GNP per capita over time. m 8 28 The latest coefficients are high — above the 0.4 level — and in seven of the Thad we a countries they have either been increasing of remaining virtually un 15s 8 8 they have either : e z Pa) m changed. Sri Lanka, Japan and Taiwan are the only three cases in which sac so the coefficients have significantly improved. The coefficients appear to be a . the highest in Southeast Asian countries which, as described in the next Banga we ” 3 aa mw & section, are the countries characterizing the model with a distinct pattern ‘ me OS § 3 of polarized development. In South Asia the coefficients tend to.be lower, id 5 and even improving, but this occurs in a situation, too, of relatively lower me 8 1” levels and growth of per capita GNP. In East Asia, land reform, strong patn 186 6 © 6 government policies regarding industrial location and growth and other we w measures have combined high levels of per capita GNP with relatively low 1388 H Me h d high levels of per capita GNP wit y Le fz posium, “The Role of Self kelance in Aternatwe, Strategies for Development.” Werld Bevclopment, 5% ILO, Employment, Growth and Batic Needs: A One fas Asa Froblem (Geneva die), § 8. Ramphat. Poward the New International Economie - , Onder (Vienna 1995) The Govoyoe Detarstion, dV Kalibrete Beyond sew ws 2 wo 0 Dependency (Washington, D.C. 1975) pp. 190177, UN, “What Now", Deselopment Dra 3S 1% ingues 1908, No.2 m 3 2 5 Both 1. Adelman, “Growth, income Distibution and_ Equity Oriented. Devel Pr ial Stracegies.” World Development, Fb: Mar, 1995. 6778: and ILO, Sharing ix Developrient a a ae . 4 Programme) Emplownent, Equity and Growth (Geneva, 1974) argue that esribution toe wo 15 a7 tha prerequate for national growth iid by lw levels ofl, mited acces vo productive m oF @ fest eng nace demand ov doen progacn sn pec. many sO Fy bvious that production iself under highly unequal patterntof income distibution will be Taiwan "6 a 8 38 geared toward urban (metropolitan) markets and lexury ood rather than to the production ‘71 a a0 Si anc nceds for sara populations mm D a 195, « Gini Goetiients are typical of mos: macro data and due to an expectedly high margin of 2 Ed error should be treated th caution, I Roses, for example, carer data may have een fused toward’ low corfcient due to tne survey technique employed. In Sanka others eee cn cesee alates tenn ie neo ST Ihavesongly swopeced the attics showing Secinog tequaliy tthe face of declinig rel Gira Mga ae Osten Set nr Tne oS an aie rape for ighiied workers Sec EL: 1 Lee "Rural Poverty in Sei Lanka, 1968-13" in 1LO. {te ve Ba pve Se, Poterryand Landfesness in Rural Ava (Geneva, 1977), 161184 fa Eur oo sper te tren Bak Yat cans” 9 M19 Sus esto.10 LO, SALI & DOUGLASS levels of income inequality Although indicative of national patterns of income growth and distribution, the aggregate accounting of the Gini coefficients does not detect directions of redistribution with reference to specific income groups nor do thiy allow for a more qualitative interpretation of the levels of in- come received by, especially, lower income groups. By compiling data showing changing distribution profiles of all income groups over time and adding to this the available data on poverty estimates, the trends in income distribution can more clearly assessed ‘Along with the adoption of a basic needs approach to develop. ment by the International Labour Organization (ILO), poverty has recent ly been defined as the income necessary to abtain essential goods and services. Tables 2-2 and 2-8 show such indices for the Philippines and rural Pakistan. In the Philippines the estimates show that the percentage of families below the food threshold line have increased from 1 percent in 1961 to 57 percent in 1971. Even though the income threshold in urban areas is from 20 to 38 percent higher chan that of rural areas, 64 percent of the rural families are below the threshold compared to less than 40 percent in urban areas In rural Pakistan the incidence of poverty has, despite some fluctuation, stayed virtually the same between 1963 and 1972 with more shan 70 percent of the population below the 2100 calorie nutrition level This isin spite of reported low and improving Gini coefficients of income distribution . Figures 2-1 to 2-5 show the cumulative income distribution pro files for four other Asian countries. In every case the trend has been one of incceasing percentages of population and households falling below the poverty lines while those above the lines have increased their share of total income over time. The spectre is thus one of increasing immiseration of lower income groups with the gains of development received by upper income groups. 5 Choo, Makehung. “Probable Size Distribution of Income in Korea: Over Time and by Seciora"in HT. Oshima and T. Mizoguchi, eds Income Distubutson by Sectort and Over Time im East and South Aanan Countries (Tokyo: CAMS. 1977), argues that corridor devel opment in agricultueal areas and che rise of urban income clases based on sills accounts fot recent increases ip income inequalities in Korea 5 The definition of poverty in each case is defined as foloms Malaysia the lomest 40 pevcens vf she population, The M&ISD level also coincides wish vi Milled workers income Bangladesh. absolute poverty x defined asthe income necessary to buy 90 percent sufficieacy Hf autttional requirements, exiceme poverty ise athe RO percent level. Rural Punjab: slightly above least ost dit for basic Mutriional equremients Thailand ihe poine at which current food consumption would ineut no debt RURAL-URBAN TRANSFORMATION IN ASIA W Table 2-2. Philippines: Families with Income below Food Threshold* (in percent by area) as a foot Fond Fond ea Teel Fans Tes Fale: These) ‘Fores = ain D & (Pose % Pesth % Mania, Subs 1785S NAN Other Urn ust BB Pal m3 Ho To 512 3 69_ * ast of 3 nionaly adem minimums det SOURCE: AS. Aber, “hlpine Poverty Thresoks.” nM. Mangas, ed, “Measuing Pine Deveoment (Mani: Delopmert Academy of the Pipes, 176, Table 2-3. Incidence of Poverty in Rural Pakistan {fin per cent) dow Povey Une! Blow Poverty Une Below Poverty Une th G5 of 2100 caries in, 2% of 2.10 cares min) _ OR of 210 cokes ia) Yeor___Hosehos—_Populon—_Hosehoks Population Haseokis —_Populson iB 2 2 a 4 6 1587 a a 2 3B 4 wee a 8 5 % “ 18370 6 % 4% 6 x won 8 n 8 a 8 8 wn ™ 5 8 Ey a ‘SOURCE: $M. Naseem, “Rural Povey ad Landessnes in Paki” in LO, "Poverty and Landosses in Rural ‘sat (197), 415 Tate 6 Panterns and trends of inequality have both spatial and social dimensions. They appear between the big cities, other urban centres and rural areas (Table 2-2, Figure 2-5), including smaller urban centres and their surrounding villages (Figure #4). They are exhibited at a national and a regional scale, as shown in Figure 2-2. Finally, as Figure 2-3 shows, they eut across ethnic lines as well. Under a variety of definitions, however, the incidence of poverty resulting from these inequalities is concentraved in the rural areas of Asia, Table 2-4 supports the view that land con: centration and other institutional arrangements surrounding access to12 LO, SALIH & DOUGLASS ution by Percent and Income Sh Selected Asian Countries : ete fea ore tw ‘ower wet We te eNe ™ ay ™ Ruan tone St hor tres MEST a ws 8s na 82 m8) 73 ke Bh na mo Maes 2 8 2 2 es ca m0 6 a ow 52 4S «0 Pore 181 53 ssw o as wm 6 m1 w 315 ns 0 Tob ISS Ms 1 as 2 as 0 s M3 13 au m2 a ‘St hat oth SBE 2 BS a nm "eas 26 me m0 a ss 15 1 a as ns 0 108 a no a1 ue 07 mm 1 a na Fam wo is ao nm wane Sous us 1 si m 3 mm 5 rd as sve nt hos om" 1s 08 a 5 se sine wo 82 2s ea 29 nt a ws a us ® ae na risus Town? M8 m2 wae na 117 8 =m w ne v6 m na ero = se a ms we na SURES | Oven a. Pade oy are erties en Cars Pa a ga fees Ot Agena ere operon fee oe ete Eee: Deon Ses Sar tou Ora gu 1 Mec om ese ete Se De Treas DS Cares Celi Moet Sane production in rural areas has abetted trends toward increasing rural in equalities and a worsening position of the lowest income groups. With the exception of Bangladesh, Sri Lanka and Taiwan, the share of income received by the lowest 40 percent of the population has declined in recent As Figuce 21 shows, income distribution in Bangladesh has worsened in che year follow ing those reprosented in Table 2-4 RURAL-URBAN TRANSFORMATION IN ASIA 13 There is no adequate way to quantify terms such as poverty and basic needs. The statistics presented here are therefore cursory, as are the Gata in Table 2-5 which summarizes selected poverty and basic needs indicators. The intention has been to identify trends in income distribution in relative and absolute terms. In many cases the evidence suggests that poverty is deepening below identified nutritional standards. Analysing from the available data and measurement, it is not too difficult to conclude that in Southeast and South Asian countries that, first, the income inequality is relatively high and, in many instances, the disparities have been increasing over the past several decades of develop: ment. Second, in rural areas the welfare of the poor is worsening and has resulted in profound poverty problems, regardless of definition. Third, in many instances there is evidence to show an absolute decline in income and welfare of the lower 40 percent of the population, This situation presents and alarming perspective for the discussion of development alternatives to answer the question of who is benefitting from development and what is happening to the poor in this process, particularly for thinking about regional development and whether the trickle down of urban industrial growth can be relied upon to solve the problem of rural-urban disparities as invisioned by the past development strategy. ‘The search for alternative development strategies requires not merely documentation of particular experiences, as realizations of specific historical and prevailing conditions pertinent to that national develop: ment, but also working out a meaningful framework for the interpretation of data from these experiences. It is not sufficient to merely explain these trends, but also to articulate these explanations in a way which allows us to identify possible alternative solutions. It is for this purpose that we build in the next section of macro-spatial framework which is to serve as a useful basis for identification of regional development alternatives to correct the distortions in rural-urban relations and patterns of unevenness engendered by the earlier developinent st RURAL-URBAN RELATIONS IN A MACRO-SPATIAL DEVELOPMENT FRAMEWORK ‘The requirements for such a framework are two-fold: it must firstly explain key dimensions of development but, secondly, must allow for sufficient disaggregation to account for the variety of prevailing national conditions, ineluding resource endowments and population pressure on1975/ 1968-9 ‘absolute paver MONTHLY INCOME/CAPITA (TAKA) 0 20 30 40 50 60 70 80 90 100 CUMULATIVE PERCENT FIGURE 2=1 BANGLADESH, CUMULATIVE DISTRIBUTION OF PER CAPITA MONTHLY INCOME, 1968-9 AND 1975, 8 1960-6) be Be © ‘poverty tine 83 i, Boon * zo, 5 So. a 5 20 28 10 5 30 PERCENTAGE OF POPULATION Figure 2-2 RURAL PUNJAB. INDIA PERCENTAGE OF POPULATION BELOW POVERTY LINE. 1960-1 TO 1970.1 Source | Rajaraman Growth and inequainy im the Rural Areas of the Indian State of Funiab. 1960-61 to 1970-71" in ILO, ‘Poverty and Landlessness in Rural Aso (Geneva, 1977) 61-74, MS tog! ALL HOUSEHOLDS MaLay_HOUSEHOLOS 6 10 20 30 40 50 60 Figuae 2-3 MALAYSIA, CUMULATIVE DISTRIBUTION INCOME, 1957/58 AND 1970 Source 15 Tones 40 parent 0 10 20 30 40 s0 60 70 20 90 100 CUMULATIVE PERCENT 9 10 20 30 40 50 60 70 80 90 100 CUMULATIVE PERCENT 7 80 90 100 ‘CUMULATIVE PERCENT OF HOUSEHOLD MONTHLY i sation Survey. 1970, compiles Housenolé Budget Survey 1957/58 and Post Enumeration S in DR. Snodgrass, Trends and Patterns in Malaysian Income Distribution, 1957.20 (Harvard. 1974), Tables Al and AIG16 800 700 600 500 00 ms) 300 200 130 MONTHLY HOUSEHOLD INCOME 100 30 80 70 60 50 40 1 20 30 40 80 60 7 80 90 Figure 2~4 NEGRI SEMBILAN TIMUR, WEST MALAYSIA CUMULATIVE DISTRIBUTION OF MONTHLY HOUSEHOLD INCOME BY SETTLEMENT SIZE - 1974 Source V Selvaratnam and 8 W Oissanayake, “Migration, Regional Development anct Employment mt Peninsular Malaysia ~ The Case O! Negri Sembilan Timur ” The Developing Economies. 1976 Appendix. Table IV "see figure 2— 3 40 36 35 Bans (000) 1968/69, 1972/73 I 20°30 40 50 60 70 BO 90 100 CUMULATIVE. PERCENT Figure 25 THAILAND: CUMULATIVE DISTRIBUTION OF HOUSEHOLD ANNUAL INCOME, 1968/69 AND 1972/73 Derived from data in NSO. Report on Socio-Economic Survey BE 2511-12 and Report on Socio Economie Survey 1971-73, Methee Krongkaew and Chintana Cheonsir ‘Determination of the Poverty Band in Thailand,” Warasarn Thammasat. 51 une September 2518, 48:69 SS ruratourbaa % otlow Ine % below Line sncrease in location seu69 wn below poverty tne (al (8) (eal Bangiok Meuooole [a] #0 To) 5 aT Centrx Umino] 9 (e190 95 Cental Rural [e210 {400 19018 ese | i \ UE 3S ve can) ry voi § ‘pepe agp San ‘(6 3M) ARE UG PSP BBL 5 opty LS Be 2g 06a ws au pte GL, NN BH Te GL OA ND AGL ON DS OM, NT SINS vay urna DP BH FL wma 1) - UNSNe TSH — BM) ESA odo UO I eS ¢ HPO es Urn eo sey TE utp SE hey EH Sy poe HRD OD APN ey HO SY GENE Be ES 18D MB 0} PAL urea hood | ‘peat w ms LLY WN, ESE eS HOM AB Sing re ‘pf viel ey wet "8 Sas a8 sty agony sap nbepe ewan ap sms 0 Ps PS 8 en PR ats AIRE 0 aby LYM ao a é gee i # g & Fz u g z snp i ges a au 2 o 8 8 a a a £ vs 98 wz. 98 S61 ets sab oar aay oes wo soununog uelsy parsejag :S10.e2)pu) spoon 218eg pue AUenog SZ aIGeL RURAL-URBAN TRANSFORMATION IN ASIA, 19 them, levels of adopted technology, socio-institutional relationships governing access co different productive activities, and stages o levels of development, A macro-spatial framework is presented in the following pages with this view in mind. It seeks co provide a more holistic view of national development processts, and following this, to consider each of tle respective cells or dimensions of the model in greater depth. Of particular concera in turning toward a rural basis of development are relations within the agriculture sector and the role of rural towns and small places in directing a process of planning from below Finally, a suggestive disaggregation of the macro-spatial model is presented to begin explorat ry discussion concerning alternative regional policies appropriate to the prevailing conditions of individual countries. The Macro-Spatial Development Framework An understanding of the patterns, processes and consequences of rural-urban distortions is not possible without recognition of the national and international setting in which development occurs. Figute 2-6 sum: marizes the basic characteristics of this setting. The essential components of the macro-spatial model are (a) external relations resulting in North. South dualism, (b) dualism between formal and informal economic activi Lies also reflected in (c) a dualism between rural and rural areas." Five essential components comprise the macro-spatial framework (a world market (WM) largely compose: of developed countries World countries and buying primary products from the Third exporting manufacty od gox particularly modern technology embodied capital goods, to them (ii) an urban formal sector (UF) dominated hy enclave foreign and domestically financed modern ma the corporate type facturing and business of (ii) an urban informal (U1) consisting of a wide range of traditional activities, small in scale and characterized by such occupations "In revising this section we realized chat G. Meiers. Employment, Trade end Develo ment (Genever Tastiut Universitace de Hances tnternatiles, 1877) suggesting Sirsilar framework has used the term “triple dualism’ to desetine these compontitn, Ts a Felated work by L. Reynolds, Image ond Realty ny Ecamumic Desviopment (New flares, Conn: Vale University Pres, 1977)" a simplified model describes the teamaformnavon from & {inlonial (o an enclave economy which tmegraies the fort setor in concent with external ‘elations.as against an olated, indigenous economy. See, eopecialy, p38,TBAOW TWiLvdS-ONOW dISvE 3-2 unos aun mm 00 RURAL-URBAN TRANSFORMATION IN ASIA 21 as hawkers, vendors, daily labourers and services which are distinet from thé enclave sector and its related professional and white collar occupations. (iv) a rural export (RX) sector generated in many cases from the plantation economy developed during colonial rule together with post-independence natural resource exploitation such as mineral extraction, oil, timber, etc.; (¥) a rural peasant (RP) economy historically isolated from the national and world market and dominated by peasants and landlords engaged mostly in food-crop production In the following three sections, the structural characteristics of these components are described in terms of the dominant processes of their interaction Accelerated Industrialization and Enclave Development ‘The interaction between the export-oriented primary sector, the modem enclave industrial sector and the world market characterizes the process of import-substitution industrialization widely advocated and adopted in Third World countties after the Second World War. Thi shown in the upper triangle in Figuee 2-1 which represents the “engine” of development under the industrial-led growth strategy and forms the rapid- growth enclave development in these countries Under this model, in the past-colonial phase of development, the first stage of transition from primary agricultural export economy to industrialized economy usually consists of import-substituting industry, especially in the production of consumption goods. Elaborate structures are devised to encourage import substituting industry. The necessity of importing capital goods froma developed countries for capital formation in the first stage of industrialization, however, caused the level of investment to be severely constrained by the capacity to export. Since foreign ex change earnings from primary products export are often limited, to in. crease the supply of investment goods requires an import capacity squeeze on consumer goods import. Furthermore, the market for consumer goods js available and the production technique is relatively simple. This first stage of transition growth was quite successful in many countries: a high growth rate of per capita income was achieved and the import dependency ratio of various sectors, especially consumer goods, declined But the dynamism of import substituting industrialization diminished once the consumer goods phase of import substituting has been22 10, SALIH & DOUGLASS fully carried out. Many reasons can be given.” First of all, the import dependency ratio of consumer goods, although declining, reaches a floor and cannot be further decreased. At the same time, the import mix shifts to one of fuels, industrial materials, essential foodstuffs, and capital goods requirid by the industrial consumer-oriented sector. Secondly, as the consumer goods phase of import-substituting industrialization is succeeded by a predominantly capital. and intermediate goods phase, the capital intensity of import-substituting projects rises, resulting in a rising import content of investment and causing the level of investment to be more dly, the projects tend severely constrained by the capacity to import. T' to require increasingly large markets in order to reach minimum efficient scales, so that the ability of import substituting industry to induce invest. ment is progresively weakened by the thin domestic market." For the further growth of national income, these difficulties have to be overcome. However, these difficulties cannot be surmounted by further exploitation of the primary agricultural sector to finance the necessary import for import-substituting industry. This is because the structure of foreign exchange earnings from primary products export. which were used to finance industrialization in the first stage, is no longer viable in the second stage due to the increase of imports required for further industrialization and the secular deterioration of the terms of trade. Expansion of the primary agricultural export sector is inhibited in some countries, on the other hand, by the landbase constraint and com peting policy choices. In addition, the relative underdevelopment of the traditional agricultural sector implies that the internal domestic market cannot expand enough to counterbalance the diminution of the foreign exchange reserves needed for capital development. Table 2-6 shows trends and pattern of international trade of selected Asian countries. In Southeast Asia, in particular, where land and other natural resources are relatively abundant, primary products com prise more than three-quarters of all exports, As the consequence, the ‘openness of these economies, represented by the percentage of GNP in exports and imports, is quite high with primary exports used to finance fuel and capital goods imports for urban industry growth. In all cases the openness of the economies is increasing, signifying as well an increasing. 9 For a detailed study see D. Felix: “The Dilemma of Impors Substation — Argeatina”, in G.F Papanch.ed., Development Policy Theory and brectce (Harvard University Pres 1968); and } Hl Bruton. "The Import Subsivatin Strategy of Economie Development: A Sursey’. The Pehitan Development Reerew, 1971 pose sae _ 1366s Sout hes Infos at Moyes 4 Priors 13S Ted 318 South Bewidch 6855 is og Neal 28 Pasan 4513 Sila 2 gt ome at ‘at Aig Kora sont Tan mao oan 98 " i 2 n Bo Sow 48 8 5 " a ® 1, Te $072 ea SOQRETS Ce 13 ite De ak Fyn 5 Ce ha “rtp eps IT TS, Oe tan fore be Coes for ups fac we Ml sed Onekrn Sar 98 6 11912) tg UN Susan Yen tha a Ff 8 Imes cw 1995 mmr mi owe we wap seme st 8 Bl we ms 7g monn na 8 we 2 42 se a n ” Rotors ‘iepoe oe 1966-70 97195 1970 rr rf a” ase 1m 055 055 oe a 7 M5 wt 5 078 ae ge 0s on 0 8s rr M6 w BRBe 26, Structure of Trade, Selected Asion Countries tara ie Na 1978 mam mB 88 1 “oR 2 Bo wae BS 6) NS mi mB) mR A 5 c 0 t F 6 i x t ™ " 2324 LO, SALIH & DOUGLASS reliance or dependency upon external trade to push the development P In South Asia where population pressure on rural resources is high, the upper triangle of external relations is inhibited by the low export capacity of the primary sector. As a result, exports and imports are re- latively low in relation to GNP, and export also consist of nearly 50 percent in semi-processed goods and light-manufacturing consumer gotds. The case of Sri Lanka with a strong plantation economy for export is the only exception: in fact, Sri Lanka could be better classified with the Southeast Asian countries in terms of openness and the structure of its economy. In all of these countries the relatively low level of exports must finance food imports equalling 25 to 50 percent of total imports In East Asia, manufacturing exports have rapidly advanced to form an important part of the economy. These exports themselves account for more than 30 percent of the total GNP in Korea and Taiwan. In spite of increasing openness of these economies, this type of export-substitution industrialization sustains the import-substitution phase based on what may be called a horizontal diversification approach. This approach ‘is one in which import substitution takes place from light consumer-oriented industries, for example, textiles, and in a second stage becomes export oriented, using foreign exchange earnings to further the growth of new import-substitution industries in a mutually reinforcing manner. China, which has followed a policy of inward-looking develop: ment and disengagement from the world economy has shown the lowest degree of openness. Exports and imports together account for less than five percent of the GNP. In addition to the high levels of openness in many countries, we note the high and increasing level of external public debt as a percentage of GNP in many Asian countries for which data exists. This indicates, in part, a trend toward greater dependency om external financing. In many cases, the import-substitution strategy initiated a vicious cycle calling for greater export activity to pay for capital goods and intermediate industrial inputs imported from the North. Some countries have found it necessary in addition to continue to expand their primary export sector thereby per petuating their dependency on world markets. In the low-resource eco homies, population growth has required food imports, also resulting in ance on forcign finance ‘The consequences of industrial regional development in ever increasing due to both the enclave nature of modern industry itself and to its polariza ear a eer ry d growth is expressed in terms of sgional dlisparities within nations RURAL-URBAN TRANSFORMATION IN ‘SIA 25 urban dualism forms a second set of relations which is also one of the major concerns of regional policy in many Third World countries Polarization and Urban Dualism ' The structure of the large cities in Asia is characteristically dit ferent from that of the metropolitan centres of developed countries in that the Asian cities are typified by a dualistic structure consisting of modern industries coexisting with the traditional economy. This dualism has been described in terms of a formal/informal sector dichotomy. The formal sector is enclave in nature with institutionally-set high wages. In addition, ue to capital-intensity of modern industry, its labour absorptive capacity is limited and urban labour tends to be absorbed into the informal sector comprising the rest of the urban economy. Rural-urban disparities are also rapidly increasing as a result of the urban biased import-substitution industrialization."" These differences have served co generate heightening rural-metropolitan migration and, in the process, growing slum and squatter settlements in the big cities.'* Although the polarization trends are most obvious in East and Southeast Asia, various indicators show high concentrations of urban Population, manufacturing employment, shares of GNP formation and Public expenditures on infrastructure in the capital cities of Asia and their surrounding regions." Evidence available for selected countries shows, for example, that the share of GDP in manufacturing generated by these cities hhas acccunted for between one-third to two-thirds of the total; the share of B. Balassa, Policy Reform in Developing Countries (London: Pergamon Press, 1977), in reviewing importsubaicution policies has, in addicion tthe employment snd income effocte also noted that excesive protection of theye modern industries has made them nom compet. tive in terms of exports, as led to excesive capacity due to limited domestic markets, hee in many cases reduced agricultural incomes, heightened balance of payment defies, and reulted in negative rel interest rateson savings nd on the allocation af invermernt funds ': M. Todaro, “A Model of Labor Migration and Urban Unemployment in Less Developed Countries." American Economic Restew |. 1864. 198-190. 2 See. especially, K. Salih. etal. “Decentralization Policy, Growth Pole Approach, and Re source Frontier Development. A Synthesis of Response in Four Southeanadses Conntnos fa F Lo and k Salih, Growth Pole Strategy and Regional Development Policy (Landon. Pet amon, 1978): 0. P, Mathur, “The Problem of Regional Disparities. An-Avalyss of Indian Policies and Programmes” ibid.: B. Song. Economic Growth and Rural Urban Relations it Korea’ paper presented at UNCRD Colloquium af Indian Policies and Programmes Ibid 'B. Song, “Economic Growth and Rural Urban Relations in Korea", paper presented at Ui Colloquium on Rural-Urban Relations and Development Plamen in Asia. 7-1826 LO, SALIH & DOUGLASS total employment in manufacturing covers the same range." ‘As table 2-7 indicates, the growth of Asia's primate cities con. tinues at high rates, faster than either those of the population as a whole or the urban system itself. The same table begins to suggest, however, that this type of development is less than desirable. In most primate cities by the end of the 1960s and early 1970s from one-fifth to almost one-half of the households lived in squatter and slum areas. Very few of the urban born or the migrants to the big cities share in the benefits of the enclave industrialization."® As noted in the ILO report on Kenya, which served to put urban dualism back into the mainstream of debate on development planning, the limited modern industrial sector protected by the import substitution policies failed, in many instances, to spread benefits into the informal” sector comprising the rest of the urban production activities."* ¥ Seoul increased its share of total manufacturing employment from 28 to $0 percent be ‘ween 1860 and 1975, share of foil population grew rom 10 vo 20 percent B. Cong, “Eco omic Growth" The Manils region (IV) acaounted for 60 percent of tom fined Sats In Iiege wale manufacturing in 107, between 1964-92, 48 percent of al government expendi {Girton infasructure wat made in the to regions surrounding Mania: C. Miranda, *The Spatial Pattern of Philippine Manufacturing” paper presented ax UNCRD Colloquium on Rurai Urban Relations and Development Panning it Asia, November 1997, Nagoya. in ‘Thailand, the Banghok Metropolis tccounted for 80 percent of the GDP in 1976, Yor 81 pee ent of total capt invenment between 1960-76, and long with its surrounding, Gentral Region increased its shave ofthe GDP from 52 to 80 percent between 1960 and 1970 Sali, a1 ’Decentraliation Policy” Although “traditionally a non primate ety, Kuala Lompur is Sluo showing tendencies ward becoming a centre of polanaed development, This cy and ts Surrounding sate of Selangor accounted for 36 percent of tbe GDP in manufacturing and bhad the highese per capita income in 1575. Except for sparsely populated regions now the target of reselement schemes, she state alo had the highes population growiheot Peninsular Mafsyua beeween 1957 and 1975. K- Suh, ec al, “Decentralimtion Polley” In India, Bom bay, Madras Calcutta and thei sucrounding sates accounted for 49 percent of total man facuaring employment and 60 percent of toal manufactoring value added. 1969-70. 0. P Mathur, “The Problem of Regronsl Dspariier, An Anaiyas of Indian Policies and Pro frames.” F Lond K- Salih, Crowth Pots. Karachi accounted for 31 percent of Pakistan fanufacturing value added 1974/78 and led the satin in manufacturing growth rate Fetween 1990.15 at 5.6 percent/yeur a share of total GDP increased from Is te 16 percent between 1970 and 1975" UNCRD. Regional Development im Sind, d Comprekensae lon ring Report (Nagoya, 1976) Although its share of population bas nor increased tn recent Sears Colombo ail compres 52 pereent of the total urban population of Sh Lanka. Sena Sine and Wanigasehera. 4 vee 1 OF the 12 fastest growing cities in the world projected for the year 1970 to 1985, one-half ase in Asia: M. Todaro, Internal Migration im Developing Countries (Geneva: ILO, 1975), ble 1 % 1LO, Employment, Incomes, end Equality A Strategy for Increasing Productive Employ mento» Kenge (Geneva, 1578) revived interes in Gualie development which formed the Bact of earlier development theories of, especially. J'H. Boeke, Economics and Economic Policy of Dual Societies (1958) and W. A” Lewis “Economie Development with Unlimited Supplin of Labour The Menchester School, 28 (1954) B. Higgins. “The Dualisic Theory of Underdeveloped Areas.” Economic Development and Cultwel Change, Jan. 1956. These urlier models were. however. more concerned with rural/urban duals an later with teh ‘nological dualism rather then wath urban labour marker deshon pers Table 2-7. Population Growth Rate & Slum/Squatter Households of Major Asian Cities Nd Snare Cont Rae To an Hae of Garey _ Oy tae Pin Perel Baha fries ara 1d 2M am tS wn tmags $2 BND gy Miera Naame 18) a> we x oman 88 ari BE Pripores Meco Mana 15D 21180 tom 3 sm Tine: 1 THEO gs Tabet Baghek_— 1870 810+ eS en Sut Ast lee Sanpine 61-1681! : or ime 32 13t forty HEI 41808 we wr sens 37g Caos st 4 ce) wim 8 Oe i M4 6 Ww Dei 1571 tog 4 mw Wienbal 61 12.8 5 19s 7 Moos 1B 7a sn tagug 1 18 Sita onde 181 11m» 4 i a a oy 2 fl tale, 2 SGU Poison Hora S* se 2 195 sm wD ax bs fou Seat 190 S250 ane vrs aoa 947 SUSE ay Toner Tao 51178 oy 8B Te tuese 2% 188519 SOURCE» harain Popes” Ore Mew 2 1 a sag Save SHU Tow Ff Sc an Fy okie of Alten Mpa Gh Ong Cer Wirt Pape oR, Crt, Oe 8 4 "Utwito nBorkit Ga Rego Pann Cree 170 1 Mert tera IE fess Fe 1 -Demapage Vor So a4 “Turin Reser nS Gree SET Sere, 3690, UND 187 5 ard on Sal og Pape No 0 ap "onto 19 | Sst Ye Bk of he ec # Oe 7 | owe Ore MERE ton 178 TMS" Rts at Rebar Soares Kal amp’ Gat, Set 1975 man Sanna Oy Sey My 5628 LO, SALIH & DOUGLASS “The modem or formal sector, although high in growth, is often limited in both labour absorptive capacity and in generating multipliers which reach into the informal sector. In some cases, the protected modern industries competitively eliminate traditional modes of production and the employ. ment opportunities they generate. As a consequence, much work in the informal sector becomes “involuted” with productivity and real income declining over time.” “The notion of formal/informal dualism admittedly presents an ‘extremely simplified view of the social and economic relationships in developing economies. Furthermore, the distinction between the dualistic structures shows little consistency from study to study."" Yet, in modelling the complex processes, simplification is necessary, and the general dif- ferentiation between the formal/informal sectors is suggested as part of an initial framework for assessing the implications of policies which give limited benefit to only the modern sector of the urban economy. Table 2-8 represents a rough estimate of the size of the informal sector in the non-farm activities in Asian countries. Since the dichotomy is based on a very rough classification between wage-earners as proxy of employment in the formal sector, against self-employed and unpaid family works in the informal sector, it obviously underestimates the size of the informal sector as even small informal sector accounts for from one-third 1 Labour productivity in informal manufacturing in yee Philippines. which comprises 0 percent of the manufacturing Tabour force, declined (0 absolute terms while that of the ganized (Formal) sector rose between 1956 and 1966. R. Bautiwta, “Employment and Cbour Productivity in Small scale manufacturing in the Philippines” NEDA Journal of Development, 1:1 (1974), Tables | and 2 \ The majority of definitions lie within the boundary of the informal/formal distinction made by ILO, Employment, Incomes and Equality (2) formal: difficult entry. frequent te Trance oh overseas resources, corporate ownership lage seale of operation. capital intensive and often imported technology, formally acquired shill, and protected markets! (8) in ermal: ease of entry, family (ard individual ownership of enterprises, small scale of opera “on. labour intensive and adapted technology, skills aequited outside the formal schoo! system, uneegulated and competitive markets The selection of definitional esteria and the Interprecasion, Yowever, reflects both ideological bist and the dificulty in establishing clear boundaries. Thur the srasinonal! modem’ dichotomy (B. Higgins, Economic Development 1966), "bataar/ tims type capitate (MeGee, “Cancet af Catalyst), family and individual! corporate (Friedmann and Sullivan, “The Absorption of Labor"), small sale/Targe scale (Oshima, "A'Labor intensive Strategy”: Bycrlee ard Eicher, “Rural Employment’) aitempe to characterize similar phenomena but with differing emphasis and policy Sanclusons. For dies which give reletence to informal formal sector dual i= Asia ace Mazumdar D. "The Urban Informal Secior.° World Development, 48, 1976, pp. 685473: G. Papanel The Poor of Jakarta’: RM. Bautista, "Employinent and Labor Productivity in Small veale manufacturing in the Philippines.” NEDA Jourtal af Development, Isl, pp. 41-54, 1914 Bore AN., The Informal Sector in the Caleutta Metropolitan Economy (ILO. 1974) Sethuraman, Jakarta: UN, "Anatomy of Labot Absorption in Philippine Manufactuting 1936-66," EBAFE, XXIV2/3. pp. 12-22. 1973, 29 es Westar rae Tee mw 8mm gs sm om mM om & Sven mere mom Se ve ee m om om as pee mmm et msm) Gm ee es) mo & om mw oe... r= TS tw nmamy “crews Seem tad on oa so oe a ee Su ema tr tom mows tm msm ‘SOES Ul bt det ae “eget een ray a inert een nfo Basan Tege oe arses rem ia o aee EES Ra can oe Ree Sen ede io eek to one-half of the labour force of the metropolitan centres and more than three-fourths of the labour force in commerce and service activities in most countries. It also accounts for at least one-third of the manufaccuring labour force. As evidence from Indonesia suggests the proportion of Jabot in the informal sector increases with distance from the primate city, reaching 94 percent of the labour force in East Java, indicating the magni aude of urban dualism.30 LO, SALIH & DOUGLASS Polarization and urban dualism form one part of the scenario of development in Asian countries which serves to first identify issues related to the development of the rural-urban system, namely the absence of key turban functions outside of the metropolitan region and the lack of com plementarity between rural and urban development. At the same time it raises key questions concerning production patterns and labour markets related to the nature of linkages between the formal sector and the rest of the urban economy and the labour absorptive capacity of high-growth sectors. These issues together converge on one overriding concern: in. equalities and poverty associated with patterns of access to production ‘opportunities and the distribution of benefits of development The Peasant Economy in the Rural Sector “The third form of interaction between the sectors identified in the spatial framework is that within the peasant agriculture economy \cludes the overwhelming majority of people in rural Asia. This economy is essentially village oriented. As will be noted later, small towns are poorly developed in Asian countries and linkages between the village and more distant regions are often based on the extraction of primary products and the limited imports of manufactured goods either produced in the metropolis or channeled through it from abroad. This low level of urbanization is due to the nature of the subsistence economy and lack of cash income in these rural areas. ‘The peasant economy is thus relatively isolated from the rapidly. expanding sectors of the economy concentrated in the metropolis or in the plantation sector. In this economy, technologies remain “traditional” and production critically depends on landlord-peasant relationships and land. ownership pattern. Table 2-9 shows two trends within this sector which are indicative of a process of rural dualism underlying the major problems of rural stagnation First, population densities are extremely high, given the agrarian nature of Asian countries, in especially South and East Asia, whether measured in terms of total population or in terms of rural population per square kilometre of arable land. With the exception of Korea and Taiwan, land available per agricultural worker has been declining. ‘At the same time that land/worker ratios ate worsening, land, traditionally the most important asset in agrarian societies, has become more concentrated. Thailand, which experienced expansion of cultivated area in the 1960s, is the only country to have recorded an improvement in 31 Table 2-9. Population Densities, Agricultural Land per Worker and Gini Coefficient of Land Concentration: Selected Asian Countries Popkin Ril gfe (ri Conte Dersty Popdton LndWoter tnd (erence ie? Concern 1918 eben Ton Pte 195" Year Hatwater of age Yea’ Southeast Asi Indonesia m 1065 19h O10 1908 1874 Malaria na 12 1631.88 oe 170176 wm Prifprines «= 1443 2M 1983185 e180 10158 isn Thalnd ms 193112 161888 30108 wn South Ass Bangladesh S519 na 1969088088188 083 17 Inia 155 a a | wm 12 1870 Pakistan 00 78 18318 05 1980 1370188 Silanka 183 a) 10 03 6 nD m0 Onna am og 15 0% nana 12 East Asia Korea 331 B21 0 us = 183 sD wn OR wm} Tawan 421 130 02 1gm__080 SOURCES: * Word Bark exists. 1 UNESCAP, “Wirt! Panton Prospect, 19852000 Bangkok, 1970, +5 Yamada, “A Camparative Aros of Asan Agatral Padus ard Growth Paes” (Tk Asan Product Oras, 1978, 5 T,Onchn and. Pain, Purl Poverty, Income Oisibuton and Employment in Develo Asan Casi: Revew of Past Decade” Bankok Kasra Urner, 1877.32 LO, SALIH & DOUGLASS the land distribution."** In every case, the coefficients are above those of income distribution, Putting land /worker ratios together with the coefficients of distri bution, the table shows that the South Asian countries with the greatest demographic pressure on their land resources are also the ones with the highest inequality in land distribution. Thus countries with high popula tion pressure on land do not show better asset distribution but rather imply that a dualistic or bimodal development may be taking place between those who have access to production resources — credit, water, fertilizer, cooperative organizations — on large farms and those without a small and marginal farms.” “The growing tenancy and landlessness associated with increasing concentration of land in situations of general rural stagnation may also witness diminishing income-earning opportunities for rural people. Tale 2:10 shows evidence of trends in real rural wages and indicates that in ‘many cases real incomes may be declining for a relatively large proportion. of the population. In Korea and Taiwan, where urban absorption has been. high and the productivity of land is from five to ten times the productivity of land elsewhere, real wages have risen. This is also the case of the green revolution areas of the Punjab and Haryana in India and Pakistan."! In other countries and other subnational regions, however, the dominant trend is one of declining real wages for rural labourers whose number and Proportion are increasing. ”™ 19 Land frontiers in Thailand have reported been exhausted, World Bank, Thailand: To ward a Development Strategy of Full Patierpation (Bangkok, 1978). As in many other coun ties, patterns of concentration vary significantly from region to region. In the Northeast vr ‘aly all farmers own their land whereas in certain Changwat inthe Central Region up to 80 percent ofthe farmers are tenants who have never owned fan © B. Johnston and P. Kilby. dgnculture and Structutal Transformation ix Late Developing Countries (Loadon: Oxford Univesity Press, 1975). See Appendit I for tables ssiociating form site to marketing and credit 1. The green revolution in succesful areas may have created "pockets of attraction” resulting fom increased agricultural productivity in many cates the rapid in-migration of Iabourer= has began to generate agglomeration of ton-agricutural actviuesin theif urban centres work La reduce wages oward the broader equilibrium level. See S. Bhalla, "New Relations of Pro duction in Haryana Agriculture’, and "Changes in Acreage and Tenure Structure of Land Holdings in Haryana, 1962-72,” both in Economic and Poitical Weekly XI:13, 1976 and Xils13- 1977. J.B. Eckert, Rural Labour in Punjab: @ Survey Report (Labore, 1972), shows the situation it Pakistan to be more complex a8 wage increases were enjoyed By only one fifth of the rural labourers, with the remaining four. fhs enjoying na merease at al Although information on seal wages in Indonesia is not available, a study of 20 Javanese villages cited by By White indicated that wagra for ane half ofa day's work declined by 4p ronimaicly one third between 1968-72. B. White," Population, Invoiawon and Employment [rRural Java,” Development and Change, 7.1996, 267/290, Table 2-10. Index of Real Wages of Rural Labourers in Selected Asian Countries 1. Orch and Pau, Paral Povey Ince sib a Employment in Dewsng Aon Cautie: Review of Pst Decade" Bangkok Keser, 177, Tate 1 AR Ron Thowth an eqay nthe rl Pikes", “Poet ard Landes in Pra As” (Geneva, 177, 23520. * BR, “Toward a Devepmet Steg of Fa Parieyc’ Watigon 1, 1978, st igi fr 1976-7 SFL Naya, “Wages, Eploment ard Standard of Ging of Artal Labonres in Ur Prades in RD, "Povey an andes” WL T2.24 LO, SALIH & DOUGLASS Asian Patterns of Development and Rural-Urban Transformation ‘The dualistic structures identified within the macro spatial frame. work are both chronic and exhibit increasing inequalities. The increasing inequalities are not a product of the isolation of the various sectors but ‘occur as a result of their interaction, The North-South dualism results from trade relations based on the principle of comparative advantage. In the long run this dependency may be confounded by adverse terms of trade to primary product exporters, the repatriation of profits from private foreign investment, brain drain, technological transfers and a host of other relations working to the increasing benefit of the North and, in many instances, against the expansion of income-earning opportunities and the spread of economic benefits from the capital city." The international dualism penetrates into the subnational level in concert with market mechanisms, existing institutional arrangements and public policy to exacerbate internal dualism between regions and clases of people. Market mechanisms see regional economies succumb not only to the comparative atttractiveness of industrial over agricultural investments but also to the growing economies of agglomeration found in the capital city." Due,to these economies and other factors affecting the mobility of, capital, investments are concentrated in the capital city and non-farm activity fails to decentralize."* Institutional arrangements, particularly those associated with the distribution of productive assets such as land credit, and competitive markets show a marked dualism which, in many 1 AsSinger tates there are four defining characteristics of dualit: (a) the existence of di ferent sem of sanditionrin the same ime space lvame, (b) the chronic persstence of these Felationships.(c) the constancy an8ior snereate inthe dsparivies between the conditions: (8) the weak spread and strong backwash elfec of the interreiasosships between the "superior tnd "infertor” conditions H.W. Singer, “Dualim Revinted: A New Approach wo she B10 blems of Dual Society in Developing Countries" sn A. Caimeros and M. Puri, eds. The Sova ef) of International Development (London: MacMillan, 1973) ¥ Singer, op. cit 1 Richardson water that tied Richardson. H.W cities offer agglomeration economies for most types of activ ity Size end National Spatial Strategies, p87 5 Lo and Salih demonsirate the unlkelihood of decentralization in Asian nations without large urban alternatives co the capital city. Even though the primate city may be exhibiting dlecressing economies of sale, the lack of an alternative ste with equivalent aggiomerat Economics wil inhibit decentialisation, La. F. and K. Sali, "Growh Poley and Regional Policy n Open Dualstic Economies, Westere Theory and Asian Reality" in UNCRD, Grout Pole Strategy. pp. 191-284. (See Appendia 1). RURAL-URBAN TRANSFORMATION IN ASIA 38 instavices, inhibits. increases productivity in small sale farming and urban informal activity. Finally, government policy may work to increase dualism by favouring large scale over small scale manufacturing and agri- culture, or concentrating investments in urban industry and neglecting agriculture under important-substitution strategies, and overly concen- trating on growth strategies to the detriment of employment, basic needs, and distributional objectives. The urban orientation of development policies, the capital- intensive nature of import substitution efforts together with advanced technology and management systems and the institutions (structures) erected and strengthened in pursuit of these limited development objec- tives reinforced processes of unequal internal development. The modern industrial business sector was however too small to absorb a rapidly i creasing labour force, even at very high rates of economic growth. The adoption of capital intensive technology further diminished the labour absorptive capacity of industry as did instieutionally set wages in the manu facturing and related service sector. This created what has been termed a formal-informal sector dichotomy in the an. economy and labour markets. The formal sector in many cases remains small, enjoys high pro ductivity and wages, in contrast to the informal sector which has become increasingly “involuted” and has shown little, if any, rise in productivity and income. ‘The three dualistic relationships — North-South, urban-rural, and formal-informal — are all related and integrated in a complex manner which differs from country to country depending on four dominat ing factors and their historical and prevailing conditions a) resource endowment: agriculture, mineral and other natural re (b) demographic characteristics; population densities and growth rates and levels of urbanization; (©) technology: types of adopted technology and human capital development; and (a) development ideology: e.g., inward-looking, outward-looking or basic-needs oriented development path. This is the context in which economic growth and development proceed and also differentiates Asian patterns of development. Nations with plentiful natural resources but with low technology levels, for example, will face a relatively different set of develop nations with low resources and high technology. jent issues than will A choice among development ideologies will affect the foreseeable development path of individual nations in accordance with the aspiration36 LO, SALIH & DOUGLASS of their peoples, In this regard there are two general “models” of develop: ment which have emerged.” The first may be called a “free-market model and in is characterized by a straightforward pursuit of economic efficiency in internal resource allocation and adoption of the idea of comparative advantage in the international mark/. The second model contrasts funda. mentally with the first by stressing inward-looking development, a dis engagement from the international economy, and a strong rural orienta tion in development strategy. These two models, one based on specializa~ tion ana integration into the international economy and the other on @ nurturing of diversity and self-reliance, present critical alternatives to Asian countries, Outside of the centrally planned socialist economies, it should be recognized that in most of the market economies the central government play an increasingly predominant role in resource allocation. However, these models, too, can only be evaluated within the context of existing national conditions. We present four general models which characterize the experiences of groups of countries in Asia. We caution that individual countries may not fit exactly into one specific model and may have elements of more than one model. However, the models are use ful in capturing Asian patterns of development for a better understanding ‘of the transformation of rural-urban relations. Model I describes many of the economies of Southeast Asian nations which still have untapped arable land and natural resources." The North-South relationship is based upon foreign-domestic joint investinent in natural resource exploitation and commercial crops for export and the importation of capital goods for import-fubstitution industries using advanced technolagy. The reliance on foreign venture capital and tech: nology have morcover deepened the dependency of Southeast Asian economies on the advanced economies, Investments in urban industry, both domestic and foreign have exacerbated dualistic structures in most cases while foreign participation in consumer product markets has also led to increased cultural dependency on the Metropolitan North due 10 the relatively open domestic markets and the penetration of the modern sector and value system into the periphery. In addition, polarized industrial deve lopment in capital cities further intensifies rural-urban differentials in : i : ‘Landlord Relationships ively Open Domestic Market Based , Relatively Low Technology i & E 5 & i i 8 a i i i : i 2, Relatively Rich Resource Endowments Structural Characteristics Transtormation Processes 4. Import: Substitution Modern I MODEL | Southeast Asia . Rel 17 A thied posible category may be refereed to 38“basic needs oriented path” such a8 that of Cuba, Set Lanka, Tantania and others as indicated by D- Moriwets, Twenty ise Years of Economic Development 1950 (0 1973 Washington, D.C. IBRD. 1977), 18 Basic references for thit motel may be found in D, S. Paauw and. C. H. Fei, The Trans tion in Open Dualstic Economies (New Haven: Yale. 1973). fl, Myint Economie Theory and the Underdeveloped Countries, (London, Oxford, 1971) and South Bast asta’ Economy t the 1970s, (New York, Pracger, 1971). and International Labour Office, Sharing in Develop ‘ment, (Geneva. 1998) FIGURE 2~71 ASIAN ECONOMIES: MODEL |38 > g z 8 3 2 $ =| = S & (aye-z sunois is9ng-uodui) “€ n§ DuOIpueT-IUeUaL Pry uBia04 aIqesopisu0) “z enuareg ode Gory yero1oUeD a i Ueaun-iesny axes0pow pue sBajouu294 Ur2pOW MMI AnsApU Won mt sorse20%4 uoeui4o)s03 ey winos 11300W RURAL-URBAN TRANSFORMATION IN ASIA 39 come, welfare and employment opportunity, and is reflected in increas- ing regional disparities. Wage-income differentials between formal and informal sectors in the urban and rural sectors also have been widening in the process of rapid urban-industrial development which in turn generates excessive rural-urban migration to the capital cities. At the same time, Kinship-based income remittances from the cities have become the major channel to support the rural poor who remain in the economically stagnate villages. In agriculture, severe landlord tenant relationships exist, either in the traditional food or cash crop peasant sector. In this context, public sector activity has been oriented toward rural Infrastructure development. ‘The South Asian countries tend to fall into Model II, which is characterized by high population density against relatively poor land — in. many instances leading to food deficit problems in the pockets of poverty — lack of other natural resource endowments and low levels of tech- nology." Dependency measures are likely to be low because both export potential of commercial crops and pracessed products and foreign invest- ment are low. The import-substitution industries with modern technology are relatively small in terms of share of GDNP as well as having limited employment effects. In the rural sector a system of landlord-tenant re- lationship still dominates agricultural production and rural social struc- ture, with relatively isolated rural villages loosely linked with scattered urban centres. Social mobility in response to modernization is to some ‘extent constyained by social-institutional regidities. As a consequence the external linkage between the rural and urban sector is limiced, but massive transfers of the rural population, consisting of the marginal and landless farmers as well as the unemployed, to the major cities are evident, leading to the formation and expansion of the informal sector. Model III is an extension of Model II with a strong political “ology which characterizes the so-called “Chinese” model.”* Under this model the North-South dualism is eliminated as the national economy dis: ‘engaged itself from the world marke: system, In the first phase of develop- ‘ment redistribution of traditional assets, including drastic land reform and tion of the productive capacity, was implemented through a Sean aeengomrg Sexforemamae i, 1967)'5.R Lew Irs Economie Poy RG mobinronsae R Crifinted work (London Methyer. 978. 2 Genes lerrey are min couttyaecifensienon ‘inti nay Developmen Experience (Landon: Mus neni” Socal Goo ahd Brae cents (Cambnade Tediggonral Growin in Patsan(Lordon: Alen 8 Uown The Beonamic Development of Bangadesh mihi Soca Fi © See A, Eckstein, Chinas Economic Development (An Arbor: Mihigen UP, 1929). An interesting ariel DB Keeiggs“Econome Lewons fem Crna” Jounal of Besttopmen; Eronomics Waka Merch 1995 pp 1-32¢his thou in World Developmen, Vol 3/Not7& spect iut on China’ Road {o Developmen, particularly. 1-0: Gusey, "Rare Development in Chi 130-72, nde Lemons tobe (Carnet ffom i*rand J. Spurdson, "Rural Incsiraaation 1a Chins”(1 7300W ‘S3IWONODA NvISV (aie-z aunos OH yuma 1uawaopes £8010 eisy 1383 AL1300W IL 73d0W ‘saIWONOD3 NVISV (sye-z anol {Wopow exomza} Awouog peEo19 pouU42 LO, SALIF. DOUGLASS. centrally controlled bureaucratic machinery which dictated employment allocations as well as rural-urban migration. In the second phase, external dependency continued to be minimized. Economic activities together with socio-political institutions are organized into a system of self-reliant regions which given emphasis to the adoption of indigenous technology for agro feed and agro-processing industrialization. In other words, strong rural: urban linkages in terms of production processing and marketing were established in each region in which the lower order urban centre plays a key role in assisting rural development. A number of new Southeast Asian countries, including Kampuchea and Vietnam, may be included in this category Model IV is characterized by high population density, low re- source endowment and use of high technology in the modernization of the economy." Japan, Korea and Taiwan have had a relatively long period of science-oriented modern education systems which have led to an intensive development of human capital and achievement of high absorptive capa city in a process of endogenization of Western-oriented modern technology. Due to poor resources the period involving primary export-led, import substitution industrialization for these countries was rather short. Instead in the first stage import-substitution industries were able to become export industries to support other import-substitution industries. This is made possible through a strong protection of the domestic market, particularly against dominant foreign investment and import of luxury consumer goods. With rapid expansion of urban-industrial development, labour absorptive capacity was expanded accordingly, together with remarkable complementary linkages between large and small scale industries (in the ‘case of Japan). This was able to transform the agrarian society toward a modern industrialized society leading to comparatively high standards of living and better income distribution than found in the other models. On the rural side, in the early stages, rural resources were channélled to support self-reliant industrialization (Japan). On the other hand, a success ful post-war land reform had eliminated the dual structure in the rural sector. Rapid industrialization at a later stage was able to absorb rural surplus labour into the urban sector together with continuous rural infra structure formation made possible through industrial growth. 2 he tne model of acre Ain Developmen i apa. exe stad of which nde. Onlawa and H Resoukey:Jopon Economie Growh (Stanlord Un, Pressand London: Oxford UP TER Kletnund Onkawa, (eds) Esonomic Growth: The Jopanese Experience since he ey Ere (Howewood; i Rb. Irwin 196i) For Tawa, seer to Puauw and Fi op ch and on Koren See gponches 1 Development Panning (Banna Sobre Wophiny 03) or nd hapanee developmen pater see B Song =The Pattern of Korean Grom, i Peapecive with special consideration of th 1997, and B. Song. “Ecanome Growth and Rural-Urban Reno in Ker 1998 Rapoya) eee Paras RDI Moen. ENCRD Werke Pone RURAL-URBAN T..NSFORMATION IN ASIA, 43 ‘The four models described above present the alternative develop: ment contexts within which approaches to a strategy of disengagement or integration may be examined. The different patterns of dependency with respect to the world economic system provides, more importantly, the basic structure within which processes of rural-urban disparities may be explained and regional policies toward their transformation analyzed. But the impact of dependency relations and internat unequal development cannot be separated when formatating such policies: they simultaneously provide the constraints and the possibilities for balanced rural-urban development in the rural regions. Discussion of this matter will be taken in the last section in relation to the framework.of the new development paradigm. The macro-spatial model is useful for pointing to several proposi tions related to migration, rural-urban relations and internal development disparities, The more important of these are: (a) current international relations and national development patterns under strategies of accele: rated industrialization in many cases increase rural-urban differentials; (b) these same relationships increase disparities among income groups; (c) as a result, urban and rural development becomes less articulate, and the capital city becomes the primary repository of vital economic and social functions; (€) although migration to the large urban center is encouraged under this pattern of development, the results, largely due to formal/ informal dualism and possible effects of development policies, may not lead to either an increase in rural productivity nor the absorption of labour into the urban economy.