China's collectivisation puzzle: A new resolution

Abstract

According to total factor productivity trends in Chinese agriculture, China achieved productivity gains both when collectivising (1954-58) and when decollectivising (1979-84) its agriculture. If the productivity gains from decollectivisation were due mainly to eliminating the incentive problems of collective farms, how the initial collectivisation could also have been associated with gains in productivity presents a major historical puzzle. We suggest as an answer the possibility that agricultural production in China was widely organised on a household basis until 1958, despite the collectivisation of property rights, and that the formation of the agricultural producers' co-operatives reduced the inefficiencies in factor allocation that existed following China's land reform.