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Property rights in a very poor country: tenure insecurity and investment in Ethiopia

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  • Daniel Ayalew Ali
  • Stefan Dercon
  • Madhur Gautam

Abstract

This paper provides evidence from one of the poorest countries of the world that the property rights matter for efficiency, investment, and growth. With all land state-owned, the threat of land redistribution never appears far off the agenda. Land rental and leasing have been made legal, but transfer rights remain restricted and the perception of continuing tenure insecurity remains quite strong. Using a unique panel data set, this study investigates whether transfer rights and tenure insecurity affect household investment decisions, focusing on trees and shrubs. The panel data estimates suggest that limited perceived transfer rights, and the threat of expropriation, negatively affect long-term investment in Ethiopian agriculture, contributing to the low returns from land and perpetuating low growth and poverty.
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Suggested Citation

  • Daniel Ayalew Ali & Stefan Dercon & Madhur Gautam, 2011. "Property rights in a very poor country: tenure insecurity and investment in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 42(1), pages 75-86, January.
  • Handle: RePEc:bla:agecon:v:42:y:2011:i:1:p:75-86
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    Cited by:

    1. Anthony Harris, 2015. "Expropriation, compensation and transitions to new livelihoods: Evidence from an expropriation in Ethiopia," CSAE Working Paper Series 2015-04, Centre for the Study of African Economies, University of Oxford.
    2. repec:oxf:wpaper:wps/2015-04 is not listed on IDEAS
    3. Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications, The World Bank, number 6626.
    4. Jianjun Tang & Henk Folmer & Arno J. Vlist & Jianhong Xue, 2014. "The impacts of management reform on irrigation water use efficiency in the Guanzhong plain, China," Papers in Regional Science, Wiley Blackwell, vol. 93(2), pages 455-475, June.
    5. Klaus Deininger & Daniel Ayalew Ali & Takashi Yamano, 2008. "Legal Knowledge and Economic Development: The Case of Land Rights in Uganda," Land Economics, University of Wisconsin Press, vol. 84(4), pages 593-619.
    6. Fenske, James, 2011. "Land tenure and investment incentives: Evidence from West Africa," Journal of Development Economics, Elsevier, vol. 95(2), pages 137-156, July.
    7. Ghebru, Hosaena & Khan, Huma & Lambrecht, Isabel, 2016. "Perceived land tenure security and rural transformation: Empirical evidence from Ghana:," IFPRI discussion papers 1545, International Food Policy Research Institute (IFPRI).
    8. Eskander, Shaikh M.S.U. & Barbier, Edward B., 2017. "Tenure Security, Human Capital and Soil Conservation in an Overlapping Generation Rural Economy," Ecological Economics, Elsevier, vol. 135(C), pages 176-185.
    9. Gottlieb, Charles & Grobovšek, Jan, 2019. "Communal land and agricultural productivity," Journal of Development Economics, Elsevier, vol. 138(C), pages 135-152.
    10. Josephson, Anna Leigh & Ricker-Gilbert, Jacob & Florax, Raymond J.G.M., 2014. "How does population density influence agricultural intensification and productivity? Evidence from Ethiopia," Food Policy, Elsevier, vol. 48(C), pages 142-152.
    11. Ayelech Kidie Mengesha & Reinfried Mansberger & Doris Damyanovic & Gernot Stoeglehner, 2019. "Impact of Land Certification on Sustainable Land Use Practices: Case of Gozamin District, Ethiopia," Sustainability, MDPI, Open Access Journal, vol. 11(20), pages 1-21, October.
    12. Matz, Julia Anna, 2013. "Ethnicity, Marriage and Family Income," Discussion Papers 154935, University of Bonn, Center for Development Research (ZEF).
    13. Jin, Songqing & Deininger, Klaus, 2009. "Land rental markets in the process of rural structural transformation: Productivity and equity impacts from China," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 629-646, December.
    14. Hanjra, Munir A. & Ferede, Tadele & Gutta, Debel Gemechu, 2009. "Pathways to breaking the poverty trap in Ethiopia: Investments in agricultural water, education, and markets," Agricultural Water Management, Elsevier, vol. 96(11), pages 1596-1604, November.
    15. Muna Shifa & Murray Leibbrandt & Martin Wittenberg, 2015. "Does tenure insecurity explain the variations in land-related investment decisions in rural Ethiopia?," SALDRU Working Papers 150, Southern Africa Labour and Development Research Unit, University of Cape Town.
    16. Lota Tamini & Kotchikpa Gabriel Lawin, 2018. "Droits de propriété foncière et performance des petits producteurs agricoles des pays en développement : une synthèse de la littérature empirique," CIRANO Working Papers 2018s-05, CIRANO.

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