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Quantifying Spillover Effects from Large Land-based Investment: The Case of Mozambique

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  • Deininger, Klaus
  • Xia, Fang

Abstract

Almost a decade after a spike in land demand following the 2007–08 commodity boom, evidence on impacts of this phenomenon remains limited and mostly case study based. We show that information on location and start data of large farms, combined with existing smallholder farm surveys, allows to complement this with a difference-in-difference approach to systematically assess spillovers from large farm establishment. Illustrative application to Mozambique suggests positive short-term effects from newly established large farms on adoption of agricultural practices and input use by small farms less than 50km from newly established large operations. Robustness checks for crop farms only also suggest job creation in the proximity of newly established crop, but not livestock farms. Yet, large farm establishment decreased perceived well-being within a 25-km band and, in the time horizon considered here, did not lead to better access to output markets, cultivation of larger areas or, once other factors are controlled for, higher yields. This allows us to reject the notion of negative spillovers from large farm establishment but casts doubt on the wisdom of large unconditional subsidies to attract investors. In addition to drawing policy conclusions for Mozambique, we highlight the methodology’s wider applicability and scope for expansion.

Suggested Citation

  • Deininger, Klaus & Xia, Fang, 2016. "Quantifying Spillover Effects from Large Land-based Investment: The Case of Mozambique," World Development, Elsevier, vol. 87(C), pages 227-241.
  • Handle: RePEc:eee:wdevel:v:87:y:2016:i:c:p:227-241
    DOI: 10.1016/j.worlddev.2016.06.016
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    Cited by:

    1. repec:eee:wdevel:v:98:y:2017:i:c:p:430-446 is not listed on IDEAS
    2. Deininger, Klaus W. & Xia, Fang, 2017. "Assessing Impacts of Large Scale Land Transfers: Challenges and Opportunities in Malawi’s Estate Sector," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258112, Agricultural and Applied Economics Association.
    3. Herrmann, Raoul T., 2017. "Large-Scale Agricultural Investments and Smallholder Welfare: A Comparison of Wage Labor and Outgrower Channels in Tanzania," World Development, Elsevier, vol. 90(C), pages 294-310.
    4. Nolte, Kerstin & Sipangule, Kacana, 2017. "Land use competition in Sub-Saharan Africa's rural areas," PEGNet Policy Briefs 10/2017, PEGNet - Poverty Reduction, Equity and Growth Network, Kiel Institute for the World Economy (IfW).
    5. Emílio Tostão & Giles Henley & Joel Tembe & Aristides Baloi, 2016. "A review of social issues for biofuels investment in Mozambique," WIDER Working Paper Series 178, World Institute for Development Economic Research (UNU-WIDER).
    6. repec:eee:wdevel:v:114:y:2019:i:c:p:110-121 is not listed on IDEAS
    7. Chamberlin, Jordan & Jayne, T. S., 2017. "Does Farm Structure Matter? The Effects of Farmland Distribution Patterns on Rural Household Incomes," Feed the Future Innovation Lab for Food Security Policy Research Papers 275685, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    8. Nolte, Kerstin & Sipangule, Kacana, 2017. "Land use competition in Sub-Saharan Africa's rural areas," Open Access Publications from Kiel Institute for the World Economy 168329, Kiel Institute for the World Economy (IfW).
    9. repec:eee:wdevel:v:104:y:2018:i:c:p:281-296 is not listed on IDEAS
    10. repec:spr:ssefpa:v:10:y:2018:i:1:d:10.1007_s12571-017-0763-2 is not listed on IDEAS
    11. Khadjavi, Menusch & Sipangule, Kacana & Thiele, Rainer, 2016. "Social capital and large-scale agricultural investments: An experimental investigation in Zambia," Kiel Working Papers 2056, Kiel Institute for the World Economy (IfW).

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    Keywords

    large farms; spillover effects; Africa; Mozambique;

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