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What drives the global"land rush"?

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  • Arezki, Rabah
  • Deininger, Klaus
  • Selod, Harris

Abstract

The 2007-2008 upsurge in agricultural commodity prices gave rise to widespread concern about investors causing a"global land rush". Large land deals can provide opportunities for better access to capital, transfer of technology, and advances in productivity and employment generation. But they carry risks of dispossession and loss of livelihoods, corruption, deterioration in local food security, environmental damage, and long-term social polarization that led some countries to recently pass legislation restricting foreign land acquisition. To stimulate evidence-based debate, this paper explores determinants of foreign land acquisition for large-scale agriculture. It quantifies demand for land deals, showing it focused on Africa where land expansion is about 20 times the level it was in the past. The analysis uses data on bilateral investment relationships, together with newly constructed indicators of agro-ecological suitability in non-protected and forested areas with low population density as well as land rights security. It estimates gravity models that can help identify determinants of foreign land acquisition dedicated to large-scale agriculture. The results confirm the central role of agro-ecological potential as a pull factor. In contrast to the literature on foreign investment in general, the quality of the business climate is insignificant, whereas weak land governance and tenure security for current users make countries more attractive for investors. Implications for policy are discussed.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5864.

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Date of creation: 01 Oct 2011
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Handle: RePEc:wbk:wbrwps:5864

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Keywords: Banks&Banking Reform; Emerging Markets; Debt Markets; Rural Land Policies for Poverty Reduction; Forestry;

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Cited by:
  1. Giorgia Giovannetti & Elisa Ticci, 2013. "Foreign Direct Investment in Sub-Saharan Africa: Drivers and the Challenge of the Land-Energy Nexus," Working Papers - Economics wp2013_09.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  2. Asongu Simplice & Nguena Christian, 2014. "Equitable and Sustainable Development of Foreign Land Acquisitions: what have we learnt on policy syndromes and implications?," Working Papers 14/001, African Governance and Development Institute..
  3. Kleemann, Linda & Lay, Jann & Nolte, Kerstin & Ott, Konrad & Thiele, Rainer & Voget-Kleschin, Lieske, 2013. "Economic and ethical challenges of "land grabs" in sub-Saharan Africa," Kiel Policy Brief 67, Kiel Institute for the World Economy (IfW).
  4. Linda Kleemann & Rainer Thiele, 2014. "Rural Welfare Implications of Large-scale Land Acquisitions in Africa: A Theoretical Framework," Kiel Working Papers 1921, Kiel Institute for the World Economy.
  5. Christophe Gouel, 2013. "Food Price Volatility and Domestic Stabilization Policies in Developing Countries," NBER Chapters, in: The Economics of Food Price Volatility National Bureau of Economic Research, Inc.
  6. Das, Gouranga, 2012. "Trans-border Land Acquisitions:A New Guise of Outsourcing and Host Country Effects," MPRA Paper 40651, University Library of Munich, Germany.
  7. Giorgia Giovannetti & Elisa Ticci, 2013. "Biofuel Development and Large-Scale Land Deals in Sub-Saharan Africa," Working Papers - Economics wp2013_27.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

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