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Relationship between the land market, economic growth and land insecurity explained by an overlapping model

Author

Listed:
  • Claudio Araujo
  • Catherine Araujo Bonjean
  • Jean-Louis Combes
  • Pascale Combes Motel

Abstract

In this paper, we analyze the relationship between the land market failures and the economic growth in Brazil, starting from an overlapping model including two sectors: agricultural and industrial. The land is both a specific factor for agriculture and an asset that can be substituted to the capital used in industry. The trade-off between land and capital holding depends, among other factors, on the transaction costs on the land market. These costs result from land insecurity and generate a decrease in the land price that favors capital accumulation. Two assumptions follow from our model: one the one hand, land insecurity has a negative effect on the land price; one the other hand it has a positive effect on economic growth. These two hypotheses are tested on panel data for Brazilian Federation. The econometric results do not reject our hypothesis. JEL Classification: O41, Q15, O54.

Suggested Citation

  • Claudio Araujo & Catherine Araujo Bonjean & Jean-Louis Combes & Pascale Combes Motel, 2006. "Relationship between the land market, economic growth and land insecurity explained by an overlapping model," Brazilian Journal of Political Economy, Center of Political Economy, vol. 26(4), pages 575-595.
    • Handle: RePEc:ekm:repojs:v:26:y:2006:i:4:p:575-595:id:617
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    More about this item

    Keywords

    land price; trade off capital-land; overlapping model;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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