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Communal Land and Agricultural Productivity

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Abstract

This paper quantifies the aggregate impact of communal land tenure arrangements that prevail in Sub-Saharan Africa. Such tenure regimes limit land transferability by prohibiting sales, subjecting rented-out land to the risk of expropriation, and redistributing it to existing farmers in a progressive fashion. We use a general equilibrium two-sector selection model featuring agents heterogeneous in skills to compute the resulting occupational and operational choices as well as land allocations. The quantification of the model is based on policies deduced from Ethiopia. In the Sub-Saharan African context we find that such policies substantially dampen nominal agricultural relative to non-agricultural productivity, by 25%. Real relative agricultural productivity, however, only falls by 4% since cross-sectoral terms of trade adjust strongly, with excess agricultural employment only amounting to some 1.5 percentage points. The loss in GDP is small, about 2%. That serves as a reminder that ostensibly highly distortionary policies need not have substantial bite when individuals strategically adjust to them and equilibrium prices adapt. For example, the model predicts that at given prices 62% of farmers in an economy such as Ethiopia would leave farming if tenure were secured, casting land insecurity as a major obstacle. Yet only 9% would actually switch sectors after price adjustments are factored in.

Suggested Citation

  • Charles Gottlieb & Jan Grobovsek, 2016. "Communal Land and Agricultural Productivity," ESE Discussion Papers 270, Edinburgh School of Economics, University of Edinburgh.
  • Handle: RePEc:edn:esedps:270
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    Cited by:

    1. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2017. "Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China," Working Papers tecipa-593, University of Toronto, Department of Economics.
    2. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, 2017. "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Working Papers tecipa-592, University of Toronto, Department of Economics.
    3. Raul Santaeulalia-Llopis & Diego Restuccia, 2014. "Land Misallocation and Productivity," 2014 Meeting Papers 1314, Society for Economic Dynamics.
    4. Emran, M. Shahe & Shilpi, Forhad, 2015. "Do Land Market Restrictions Hinder Structural Change in a Rural Economy? Evidence from Sri Lanka," MPRA Paper 66017, University Library of Munich, Germany.
    5. Gollin, D. & Udry, C., 2018. "Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277279, International Association of Agricultural Economists.
    6. repec:gam:jlands:v:8:y:2019:i:6:p:96-:d:240243 is not listed on IDEAS
    7. Chaoran Chen, 2017. "Technology Adoption, Capital Deepening, and International Productivity Differences," Working Papers tecipa-584, University of Toronto, Department of Economics.
    8. Le, Kien, 2018. "Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam," MPRA Paper 90797, University Library of Munich, Germany.
    9. Cesar Blanco & Xavier Raurich, 2018. "Agricultural Composition, Structural Change and Labor Productivity," 2018 Meeting Papers 772, Society for Economic Dynamics.

    More about this item

    Keywords

    Agricultural Productivity; Growth and Development; Misallocation; Land;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • 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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