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Yunnan province and Laos share a common border, and trade for agricultural products is active. In general, increasing trade of agricultural products is likely to accelerate the flow of population, goods and capital, expand employment and change the agricultural production structure, etc. One theory states that there will emerge divisions in agricultural production along the border lines so that cheap rice and corn produced in Laos will be imported to Yunnan, and farmers in Yunnan will choose to pursue agricultural activities that can lead to higher economic returns instead of producing the same grains. If so, this will result in the change of land use and lead to the increase of farmers’ income and improvement of their social welfares. With these questions in mind, we carried out surveys in the border regions between Yunnan and Laos. This paper discusses the reality of farm economy and land use in the border regions amid the expansion of free trade. The surveyed households of farmers have almost no involvement in agricultural product trade. Local farmers have become passive beneficiaries of grain import. As they can get cash income from rubber production and land lease, local farmers have given up the self sufficiency of rice. To fill the gap, rice is imported from Laos. The imported rice from Laos has enriched local rice markets and made the purchase of rice possible for farmers. Local farmers have chosen to expand their rubber production and lease their land. This structural change of production in certain sense represents the division of labor on both sides of the border line. According to our initial assumption, this division of labor has indeed helped to raise the economic welfare of local farmers.


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