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Rural Welfare Implications of Large-scale Land Acquisitions in Africa: A Theoretical Framework

  • Linda Kleemann
  • Rainer Thiele

Large-scale agricultural land acquisitions might entail substantial welfare implications for the affected rural population. Whether the impacts are indeed as devastating as the popular notion of "land grabs" would suggest depends on a number of factors, including the size of compensation payments, productivity spillovers on smallholders, employment opportunities for displaced farmers, and changes in food prices. We study the local welfare effects of land acquisitions in Sub-Saharan Africa using a theoretical model that captures the major channels through which land deals might affect rural African populations. We distinguish two basic scenarios. In the first scenario, the investor plants capital intensive staple food crops. Displaced farmers compete for a very limited number of jobs on the investment farm and spillovers to the remaining local farmers are rare. In the second scenario, where the investor is assumed to plant cash crops, potential spillovers through contract farming are larger and production is more labor intensive and hence provides better employment prospects. In both scenarios the crop produced on the investment farm is exported. The net welfare outcome varies with the relative strengths of the contradicting effects of spillovers, wages and food prices. We determine the minimum size of compensation payments for displaced farmers that would leave them as well off as staying on their plot

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File URL: https://www.ifw-members.ifw-kiel.de/publications/rural-welfare-implications-of-large-scale-land-acquisitions-in-africa-a-theoretical-framework/KWP1921-micromodel.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1921.

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Length: 28 pages
Date of creation: May 2014
Date of revision:
Handle: RePEc:kie:kieliw:1921
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  1. Jenny Aker and Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Working Papers 211, Center for Global Development.
  2. Dilip Mookherjee & Maitreesh Ghatak, 2010. "Land Acquisition for Industrialization and Compensation of Displaced Farmers," Boston University - Department of Economics - Working Papers Series WP2010-039, Boston University - Department of Economics.
  3. Schoneveld, George Christoffel, 2014. "The geographic and sectoral patterns of large-scale farmland investments in sub-Saharan Africa," Food Policy, Elsevier, vol. 48(C), pages 34-50.
  4. Rabah Arezki & Klaus Deininger & Harris Selod, 2014. "What Drives the Global 'Land Rush'?," OxCarre Working Papers 120, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  5. Sylvain Dessy & Gaston Gohou & Désiré Vencatachellum, 2012. "Foreign Direct Investments in Africa's Farmlands: Threat or Opportunity for Local Populations?," Cahiers de recherche 1203, CIRPEE.
  6. Johan F.M. Swinnen, 2009. "Reforms, globalization, and endogenous agricultural structures," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 719-732, November.
  7. Das, Gouranga, 2012. "Trans-border Land Acquisitions:A New Guise of Outsourcing and Host Country Effects," MPRA Paper 40651, University Library of Munich, Germany.
  8. M.O. Adewumi & Ayodele Jimoh & O.A. Omotesho, 2013. "Implications of the Presence of Large Scale Commercial Farmers on Small Scale Farming in Nigeria. The Case of Zimbabwean Farmers in Kwara State," Knowledge Horizons - Economics, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(4), pages 67-73, December.
  9. Suzuki, Aya & Jarvis, Lovell S. & Sexton, Richard J., 2011. "Partial Vertical Integration, Risk Shifting, and Product Rejection in the High-Value Export Supply Chain: The Ghana Pineapple Sector," World Development, Elsevier, vol. 39(9), pages 1611-1623, September.
  10. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
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