Farms throughout Asia are predominantly small-scale family farms. Production on such
small farms is of necessity labor intensive. When wage rate is low, small-scale farming
is cost-effective and, hence, efficient. However, wage rate has been increasing in
emerging countries in Asia, which is likely to jeopardize the viability of labor-intensive
small-scale farming. Indeed the high-wage economies of Asia, e.g., Japan, Taiwan, and
Korea, rely heavily on food imports, because they maintain small-scale inefficient
farms. Moreover, there is evidence that the production efficiency of small farms has
been declining relative to large farms in emerging Asian economies, pointing to the loss
of comparative advantage in agriculture in this region.