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Communal land and agricultural productivity

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  • Gottlieb, Charles
  • Grobovsek, Jan

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

  • Gottlieb, Charles & Grobovsek, Jan, 2015. "Communal land and agricultural productivity," LSE Research Online Documents on Economics 86311, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:86311
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    Cited by:

    1. Raul Santaeulalia-Llopis & Diego Restuccia, 2014. "Land Misallocation and Productivity," 2014 Meeting Papers 1314, Society for Economic Dynamics.
    2. Marijn A. Bolhuis & Swapnika R. Rachapalli & Diego Restuccia, 2021. "Misallocation in Indian Agriculture," NBER Working Papers 29363, National Bureau of Economic Research, Inc.
    3. Chaoran Chen & Diego Restuccia & Raul Santaeulalia-Llopis, . "The Effects of Land Markets on Resource Allocation and Agricultural Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    4. Beg, Sabrin, 2021. "Tenancy and clientelism," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 201-226.
    5. Le, Kien, 2020. "Land use restrictions, misallocation in agriculture, and aggregate productivity in Vietnam," Journal of Development Economics, Elsevier, vol. 145(C).
    6. Tasso Adamopoulos & Loren Brandt & Chaoran Chen & Diego Restuccia & Xiaoyun Wei, 2022. "Land Security and Mobility Frictions," Working Papers tecipa-717, University of Toronto, Department of Economics.
    7. Meilin Ma & Richard J. Sexton, 2021. "Modern agricultural value chains and the future of smallholder farming systems," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 591-606, July.
    8. Gao, Xuwen & Shi, Xinjie & Fang, Shile, 2021. "Property rights and misallocation: Evidence from land certification in China," World Development, Elsevier, vol. 147(C).
    9. Douglas Gollin & Christopher Udry, 2021. "Heterogeneity, Measurement Error, and Misallocation: Evidence from African Agriculture," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 1-80.
    10. Rivera-Padilla, Alberto, 2020. "Crop choice, trade costs, and agricultural productivity," Journal of Development Economics, Elsevier, vol. 146(C).
    11. 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.
    12. Li, Xingguang & Liu, Jundi & Huo, Xuexi, 2021. "Impacts of tenure security and market-oriented allocation of farmland on agricultural productivity: Evidence from China’s apple growers," Land Use Policy, Elsevier, vol. 102(C).
    13. Jianxu Liu & Mengjiao Wang & Li Yang & Sanzidur Rahman & Songsak Sriboonchitta, 2020. "Agricultural Productivity Growth and Its Determinants in South and Southeast Asian Countries," Sustainability, MDPI, vol. 12(12), pages 1-21, June.
    14. Cesar Blanco & Xavier Raurich, 2018. "Agricultural Composition, Structural Change and Labor Productivity," 2018 Meeting Papers 772, Society for Economic Dynamics.
    15. Zhao, Xiaoxue, 2020. "Land and labor allocation under communal tenure: Theory and evidence from China," Journal of Development Economics, Elsevier, vol. 147(C).
    16. Chen, Chaoran, 2020. "Technology adoption, capital deepening, and international productivity differences," Journal of Development Economics, Elsevier, vol. 143(C).
    17. Anthony Harris & Anthony D'Agostino & Sara Litke-Farzaneh & Beryl Seiler & Matt Sloan, "undated". "Morocco Land Productivity Project: Evaluation Design Report," Mathematica Policy Research Reports f3fc788501b64608b17e1cb23, Mathematica Policy Research.
    18. 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.
    19. Hossein Azadi & Eric Vanhaute, 2019. "Mutual Effects of Land Distribution and Economic Development: Evidence from Asia, Africa, and Latin America," Land, MDPI, vol. 8(6), pages 1-15, June.

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    More about this item

    Keywords

    Agricultural Productivity; Growth and Development; Misallocation; Land. Markets; International Bond Markets; Mutual Funds.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • 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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