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Land market distortions and aggregate agricultural productivity: Evidence from Guatemala

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  • Britos, Braulio
  • Hernandez, Manuel A.
  • Robles, Miguel
  • Trupkin, Danilo R.

Abstract

Farm size and land allocation are important factors in explaining lagging agricultural productivity in developing countries. This paper examines the effect of land market imperfections on land allocation across farmers and aggregate agricultural productivity. We develop a theoretical framework to model the optimal size distribution of farms and assess to what extent market imperfections can explain non-optimal land allocation and output in-efficiency. We measure these distortions for the case of Guatemala using agricultural census microdata. We find that due to land market imperfections aggregate output is 19% below its efficient level for both maize and beans and 31% below for coffee, which are three major crops produced nationwide. The regions with higher distortions show a higher dispersion in land prices and less active rental markets. We also find that the degree of land market distortions across locations co-variate with road accessibility and ethnicity and, in a lower extent, with education.

Suggested Citation

  • Britos, Braulio & Hernandez, Manuel A. & Robles, Miguel & Trupkin, Danilo R., 2020. "Land market distortions and aggregate agricultural productivity: Evidence from Guatemala," IFPRI discussion papers 1969, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:1969
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    5. Danny Cyra Yangchen & Mingyong Hong & Qisong Yang, 2022. "The Effect of Farmland Transfer on the Technical Efficiency of Farm Households in China: An Empirical Result of External Environmental Factors," Land, MDPI, vol. 12(1), pages 1-22, December.
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    10. Nie, Song & Ji, Qiang, 2024. "Impact of increasing the supply of rural finance on agricultural total factor productivity: Evidence from China," Finance Research Letters, Elsevier, vol. 69(PB).
    11. Zhang, Cheng & Nie, Kunxi & Zhu, Yueji, 2024. "Participation in land rental and labor markets and agricultural economic performance of banana farmers in China," Land Use Policy, Elsevier, vol. 146(C).
    12. Xie, Rui & Yao, Siling & Han, Feng & Zhang, Qi, 2022. "Does misallocation of land resources reduce urban green total factor productivity? An analysis of city-level panel data in China," Land Use Policy, Elsevier, vol. 122(C).
    13. Tretiak, Anton & Moskalenko, Anatolii & Tretiak, Valentina & Moskalenko, Valentyna & Tretiak, Nataliia, . "Agricultural land turnover in Ukraine: state, features and problems," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(3).
    14. Shijia Zhang & Xiaojuan Cao, 2025. "The Impact of Industrial Land Misallocation on Sustainable Urban Development: Mechanisms and Spatial Spillover Effects," Land, MDPI, vol. 14(10), pages 1-24, September.
    15. Braulio Britos & Manuel A. Hernandez & Danilo Trupkin, 2025. "Agricultural Distortions and International Migration," IMF Working Papers 2025/233, International Monetary Fund.
    16. Ke Liu & Ran Du & Jiaxin He, 2025. "Fluctuating Development Traits of Industrial Land Mismatch and Its Influence on Urban Ecological Modernization," Land, MDPI, vol. 14(5), pages 1-35, May.
    17. Zhou, Di & Hu, Yanning & Xie, Dongchun & Sun, Qiong, 2023. "Land resource mismatch and energy efficiency: Evidence from 243 cities in China," Energy Policy, Elsevier, vol. 183(C).

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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