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Property Rights in a Very Poor Country: Tenure Insecurity and Investment in Ethiopia

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  • Stefan Dercon
  • Daniel Ayalew
  • The World Bank
  • Madhur Gautam
  • The World Bank

Abstract

This paper provides evidence from one of the poorest countries of the world that the institutions of property rights matter for efficiency, investment and growth. With all land state-owned, the threat of land redistribution never appears far off the agenda. Land rental and leasing have been made legal, but transfer rights remain restricted and the perception of continuing tenure insecurity remains quite strong. Using a unique panel data set, this study investigates whether transfer rights and tenure insecurity affect household investment decisions, focusing on trees and shrubs. The panel data estimates suggest that limited perceive transfer rights, and the threat of expropriation, negatively affects the long-term investment in Ethiopian agriculture, contributing to the low returns from land and perpetuating low growth and poverty.

Suggested Citation

  • Stefan Dercon & Daniel Ayalew & The World Bank & Madhur Gautam & The World Bank, 2005. "Property Rights in a Very Poor Country: Tenure Insecurity and Investment in Ethiopia," Economics Series Working Papers GPRG-WPS-021, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:gprg-wps-021
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    References listed on IDEAS

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    More about this item

    Keywords

    Property Rights; Investment; Agriculture; Ethiopia; Africa;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • 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

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