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Land Inequality and the Transition to Modern Growth

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  • Tasso Adamopoulos

    (York University)

Abstract

Can the initial distribution of land, in a country's early history, affect its subsequent economic development? In this paper, I show that when land ownership is sufficiently concentrated, the landed elite will lobby the government to raise barriers to industrialization in order to protect its rents in the rural economy. I develop a small open economy model in which barriers take the form of tariffs on the imports of intermediate inputs used in industry. Such tariffs can affect both the timing and the pace of industrialization. The quantitative application of the theory is motivated by an important question in economic history: why did Argentina not replicate Canadian economic success, despite reasonable expectations to the contrary in the late 19th century? I provide evidence that Argentina had a markedly higher inequality in land ownership than Canada. Taking as given the observed differences in land distributions in the early 20th century, the model produces differences in equilibrium tariffs similar to the ones observed at the time, and the ones required to account for the Canadian-Argentine income gap until 1950. Over time however, as land becomes unimportant in production, land inequality ceases to be a source of policy disparities and income gaps. (Copyright: Elsevier)

Suggested Citation

  • Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April.
  • Handle: RePEc:red:issued:06-37
    DOI: 10.1016/j.red.2007.07.004
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    11. Martin Fiszbein, 2017. "Agricultural Diversity, Structural Change and Long-run Development: Evidence from the U.S," NBER Working Papers 23183, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Income differences; Tariffs; Land inequality; Lobbying;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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