Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Fable of Land Reform: Leases and Credit Markets in Occupied Japan

The Fable of Land Reform: Leases and Credit Markets in Occupied Japan Development officials and scholars routinely argue that land reform can raise productivity. It may not always do so, they write, but it can—and during 1947–1950 in Japan it did. Land reform may sometimes raise productivity, but it did not raise it in Japan. The claim that it did is a fable, a tale people tell and re‐tell only because they wish it were true. A lease is a credit transaction—a way for local elites (tied to local information networks in ways that banks can never be) to extend funds to farmers. Elites could lend money directly, but would need to create a security interest to protect their loans. Doing so requires legal procedures, however, and most local elites in prewar Japan lacked the university education necessary to manipulate those procedures. By contrast, a lease lets local elites protect their funds simply by retaining the right to evict tenants who fail to pay. As such, it represents a way for investors and farmers jointly to economize on credit market costs. The Japanese land reform program effectively banned this transaction‐cost economizing credit‐market strategy, expropriated the wealth of the investors who used it—and cut the rate of growth in agricultural productivity. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economics & Management Strategy Wiley

The Fable of Land Reform: Leases and Credit Markets in Occupied Japan

Download PDF
24 pages

Loading next page...
 
/lp/wiley/the-fable-of-land-reform-leases-and-credit-markets-in-occupied-japan-NGWSrWol0G

References (77)

Publisher
Wiley
Copyright
Copyright © 2015 Wiley Periodicals, Inc.
ISSN
1058-6407
eISSN
1530-9134
DOI
10.1111/jems.12110
Publisher site
See Article on Publisher Site

Abstract

Development officials and scholars routinely argue that land reform can raise productivity. It may not always do so, they write, but it can—and during 1947–1950 in Japan it did. Land reform may sometimes raise productivity, but it did not raise it in Japan. The claim that it did is a fable, a tale people tell and re‐tell only because they wish it were true. A lease is a credit transaction—a way for local elites (tied to local information networks in ways that banks can never be) to extend funds to farmers. Elites could lend money directly, but would need to create a security interest to protect their loans. Doing so requires legal procedures, however, and most local elites in prewar Japan lacked the university education necessary to manipulate those procedures. By contrast, a lease lets local elites protect their funds simply by retaining the right to evict tenants who fail to pay. As such, it represents a way for investors and farmers jointly to economize on credit market costs. The Japanese land reform program effectively banned this transaction‐cost economizing credit‐market strategy, expropriated the wealth of the investors who used it—and cut the rate of growth in agricultural productivity.

Journal

Journal of Economics & Management Strategy – Wiley

Published: Oct 1, 2015

There are no references for this article.