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Land Inequality and the Transition to Modern Growth

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  • Tasso Adamopoulos

    (York University)

Abstract

Can the initial distribution of land, in a country's early history, affect its subsequent economic development? In this paper, I show that when land ownership is sufficiently concentrated, the landed elite will lobby the government to raise barriers to industrialization in order to protect its rents in the rural economy. I develop a small open economy model in which barriers take the form of tariffs on the imports of intermediate inputs used in industry. Such tariffs can affect both the timing and the pace of industrialization. The quantitative application of the theory is motivated by an important question in economic history: why did Argentina not replicate Canadian economic success, despite reasonable expectations to the contrary in the late 19th century? I provide evidence that Argentina had a markedly higher inequality in land ownership than Canada. Taking as given the observed differences in land distributions in the early 20th century, the model produces differences in equilibrium tariffs similar to the ones observed at the time, and the ones required to account for the Canadian-Argentine income gap until 1950. Over time however, as land becomes unimportant in production, land inequality ceases to be a source of policy disparities and income gaps. (Copyright: Elsevier)

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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 11 (2008)
Issue (Month): 2 (April)
Pages: 257-282

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Handle: RePEc:red:issued:06-37

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Keywords: Income differences; Tariffs; Land inequality; Lobbying;

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References

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Cited by:
  1. Anders Akerman & Anna Larsson & Alireza Naghavi, 2011. "Autocracies and Development in a Global Economy: A Tale of Two Elites," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c016_041, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Tasso Adamopoulos & Diego Restuccia, 2014. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," Working Papers, University of Toronto, Department of Economics tecipa-509, University of Toronto, Department of Economics.
  3. Fergusson, Leopoldo, 2013. "The political economy of rural property rights and the persistence of the dual economy," Journal of Development Economics, Elsevier, Elsevier, vol. 103(C), pages 167-181.
  4. Tasso Adamopoulos & Diego Restuccia, 2013. "The Size Distribution of Farms and International Productivity Differences," Working Papers, University of Toronto, Department of Economics tecipa-480, University of Toronto, Department of Economics.
  5. Guilló, María Dolores & Pérez-Sebastián, Fidel, 2012. "Neoclassical Growth and the Natural Resource Curse Puzzle," QM&ET Working Papers, Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica 12-14, Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica.
  6. Patrick Doupe, 2014. "Reduced Deforestation and Economic Growth," CCEP Working Papers, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University 1402, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.

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