THE HOUSEHOLD RESPONSIBILITY SYSTEM REFORM AND THE ADOPTION OF HYBRID RICE IN CHINA

This paper studies the diffusion of hybrid rice before and after the recent institutional change from the collective team system to the household-based farming system in rural China. A simple model which treats the adoption of hybrid rice as a portfolio selection problem is presented. The model is tested against time-series cross-county data collected from Hunan province in south China. The empirical evidence suggests that: (1) adoption behavior in the collective system was not consistent with the predictions of the theoretical model (this evidence indicates the existence of administrative intervention in influencing production decisions in the collective system); (2) there was a significant change in the structure of the adoption function following the transition from the collective system to the household-based system; and (3) adoption behavior in the household system is consistent with the predictions of the theoretical model. © 1991.