Don't Be Ideological in Asia

Many of Asia’s historic ‘reset’ events - from Hiroshima to the declaration of the People's Republic of China in 1949, or even the end of the Vietnam War - produced government-‘directed’ economies that are fundamentally different than what we see in the West.
And this prevailing system offers investors a major advantage...

More continuity and predictability than what we get from the West.
However, in order to fully understand this system and reap the benefits of doing so, we've had to look at the foundation it was built on. And in Asia, that means looking at its agricultural history...

Particularly Land Reform.
For thousands of years - back to at least 6,800 B.C. - when the region’s societies were Neolithic, agrarian economies, the 'natural capital' was cultivated to provide food, sustain life, and generate wealth.
This 'resource-based economy' later morphed into feudal systems that saw big landowners controlling most of the land and power, while the average farmer owned nothing.
Then, communism in the region in the mid 20th century merely supplanted the landlord with the State.
Finally, we witnessed 'real' growth across the board out of the aforementioned 'resets' of the 20th century. Political elites agreed that change would be needed if Asia were to ever keep up with the West, and land reforms - or as The Economist puts it, "seizing land from those who have it and giving it to those who do not"- were slowly introduced.
In China, millions of deaths resulted. We don't take this lightly... but our job is to leave the politics and morals aside.
To observe and learn from these decisions without an ideological lens. And the truth is - the redistribution of land to the people who worked on it was a key event in the liberation of capital in the region. It was a catalyst for the rise in manufacturing and ultimately services.
Here is a list of the most important changes resulting from the rural poor receiving the rights to their own land, in my opinion:
1. When farmers were able to 'profit', instead of merely sustaining their families, their desire to produce increased. And when they profited, they invested the surpluses into manufactured goods and services, putting more money into their local economies and allowing the manufacturing section to grow.
2. This reduced economic inequality, and food output increased to the point where larger yields led to surpluses.
3. The government taxed these surpluses. The revenue generated from these taxes were reinvested into infrastructure.
4. By using their land collateral, for the first time farmers accessed loans, set up new businesses, and expanded their wealth.
These political decisions led to paradigm shifts in the economies of Asia. Today, similar government-led decisions are being made that will reshape the region for decades to come.

Peter Pham