142 THE ECONOMIC JOURNAL LJANUARY sA art of a apital formation. 6 In 1958, large-scale communes were formed as nationwide Great Leap Forward movement.Contrary to expecta- ions, however, agricultural production plunged dramatically for three succes- sive years and widespread famine ensued. During 1959-61, the death rate per thousand people increased dramatically while the crude birth rate per thou- sand people declined equally precipitously(see Fig. 1). 8 Economists have attempted to explain the causes of the sudden reduction in agricultural output. Conventional hypotheses include three successive years of bad weather, bad policies and bad management in the communes, and incentive problems due to the unwieldy, large size of the communes(Eckstein 1966: Chinn, 1980: Ashton et al., 1984 and Perkins and Yusuf, 1984). Lin 1/1000 Birth Rate Death Rate 5H+++++++++++++++++++ 194919541959196419691974197919841989 Fig. l. Birth Rate and Death rate in China, 1949-1989. Source: State Statistical Bureau(1990, p. 2) Ib Projects of capital formation include constructing irrigation systems, such as dams and reservoirs, building infrastructure, or the like Mechanisation was also used as a rationale for increasing the size of a 11 The principal characteristics of the Great Leap Forward may be summarised by policies related to technology, management and planning, and industries and ideology. See Riskin (1987) for additional As shown in Fig. 1, the changes in population trends started in 1958. However, the increase in the eath rate and the decline in the birth rate were likely to have been the result of massive mobilisation over China in 1958 as one of the most mportant compo g furnaces, which were set up in backyards for producing steel by m of the traditional iron- mponents of the Great Leap Forward movement Since the technique was extremely labour-intensive, people did not have time or did not give enough attention to health care and reproduction C Royal Economic Society 2000increase capital formation.16 In 1958, large-scale communes were formed as part of a nationwide Great Leap Forward movement.17 Contrary to expecta￾tions, however, agricultural production plunged dramatically for three succes￾sive years and widespread famine ensued. During 1959±61, the death rate per thousand people increased dramatically while the crude birth rate per thou￾sand people declined equally precipitously (see Fig. 1).18 Economists have attempted to explain the causes of the sudden reduction in agricultural output. Conventional hypotheses include three successive years of bad weather, bad policies and bad management in the communes, and incentive problems due to the unwieldy, large size of the communes (Eckstein, 1966; Chinn, 1980; Ashton et al., 1984 and Perkins and Yusuf, 1984). Lin 16 Projects of capital formation include constructing irrigation systems, such as dams and reservoirs, building infrastructure, or the like. Mechanisation was also used as a rationale for increasing the size of a collective. 17 The principal characteristics of the Great Leap Forward may be summarised by policies related to technology, management and planning, and industries and ideology. See Riskin (1987) for additional descriptions. 18 As shown in Fig. 1, the changes in population trends started in 1958. However, the increase in the death rate and the decline in the birth rate were likely to have been the result of massive mobilisation for producing steel by means of the traditional iron-casting furnaces, which were set up in backyards all over China in 1958 as one of the most important components of the Great Leap Forward movement. Since the technique was extremely labour-intensive, people did not have time or did not give enough attention to health care and reproduction. Fig. 1. Birth Rate and Death Rate in China, 1949±1989. Source: State Statistical Bureau (1990, p. 2). 142 [ THE ECONOMIC JOURNAL JANUARY # Royal Economic Society 2000