Introduction

This chapter determines the mechanisms of growth in the early expansion of the smallholder sector, and evaluates the potentialities for future growth within the sector following the same patterns of growth. It analyses the initial dynamics of the smallholder economy that is made by applying three conflicting theoretical explanations: the dependency theory, the comparative cost theory, and the vent for surplus approach. The chapter argues that the vent for surplus theory helps to reveal the forces behind the early expansion. Until recently the neo-marxist version of the theory of imperialism, so-called development of underdevelopment analysis or the dependency approach has been in the focus of Third World studies. The chapter shows that during the decades after independence the development of the Malaysian smallholder industry has been entirely different from that in the early years of expansion. The need for structural change is urgent and it is difficult to foresee any future for the small-scale peasants unless such changes are achieved.