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Land Tenure, Investment Incentives, and the Choice of Techniques: Evidence from Nicaragua


  • Oriana Bandiera


The choice of cultivation techniques is a key determinant of agricultural productivity and has important consequences for income growth and poverty reduction in developing countries. Household data from Nicaragua are used to show that the choice of cultivation technique depends on farmers' tenure status even when techniques are observable and contractible. In particular, tree crops are less likely to be grown on rented than on owner-cultivated plots. Further evidence indicates that the result follows from landlords' inability or unwillingness to commit to long-term tenancy contracts rather than from agency costs due to risk aversion or limited liability. Copyright The Author 2007. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail:, Oxford University Press.

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  • Oriana Bandiera, 2007. "Land Tenure, Investment Incentives, and the Choice of Techniques: Evidence from Nicaragua," World Bank Economic Review, World Bank Group, vol. 21(3), pages 487-508, May.
  • Handle: RePEc:oup:wbecrv:v:21:y:2007:i:3:p:487-508

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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Deininger, Klaus & Goyal, Aparajita, 2012. "Going digital: Credit effects of land registry computerization in India," Journal of Development Economics, Elsevier, vol. 99(2), pages 236-243.
    3. Deininger, Klaus & Ali, Daniel Ayalew & Alemu, Tekie, 2008. "Impacts of land certification on tenure security, investment, and land markets : evidence from Ethiopia," Policy Research Working Paper Series 4764, The World Bank.
    4. Lovo, Stefania, 2016. "Tenure Insecurity and Investment in Soil Conservation. Evidence from Malawi," World Development, Elsevier, vol. 78(C), pages 219-229.
    5. Dzanku, Fred M., 2015. "Household-specific food price differentials and high-value crop production in rural Ghana," Food Policy, Elsevier, vol. 57(C), pages 73-82.
    6. Castañeda Dower, Paul & Pfutze, Tobias, 2013. "Specificity of control: The case of Mexico's ejido reform," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 13-33.
    7. Ali, Daniel Ayalew & Deininger, Klaus & Goldstein, Markus, 2014. "Environmental and gender impacts of land tenure regularization in Africa: Pilot evidence from Rwanda," Journal of Development Economics, Elsevier, vol. 110(C), pages 262-275.
    8. Liscow, Zachary D., 2013. "Do property rights promote investment but cause deforestation? Quasi-experimental evidence from Nicaragua," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 241-261.
    9. Ma, Shuang & Mu, Ren, 2017. "Forced off Farm? Labor Allocation Response to Land Requisition in Rural China," IZA Discussion Papers 10640, Institute for the Study of Labor (IZA).
    10. Giles,John T. & Mu,Ren, 2014. "Village political economy, land tenure insecurity, and the rural to urban migration decision : evidence from China," Policy Research Working Paper Series 7080, The World Bank.
    11. Luis H.B. Braido, 2005. "Risk and Insurance in Sharecropping," Risk and Insurance 0508002, EconWPA.
    12. Klaus Deininger & Daniel Ayalew Ali & Tekie Alemu, 2011. "Impacts of Land Certification on Tenure Security, Investment, and Land Market Participation: Evidence from Ethiopia," Land Economics, University of Wisconsin Press, vol. 87(2), pages 312-334.

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