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The effect of incomplete land tenure contracts on agricultural investment and productivity in Cameroon

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  • Niee Foning, Maxime
  • Kane, Gilles Quentin
  • Ambagna, Jean Joël
  • Fondo, Sikod
  • Abayomi Oyekale, Samuel

Abstract

The aim of this paper was to analyse the effects of secure land tenure contracts on agricultural productivity. These effects will be highlighted through investment. Data from the third Cameroonian household survey (ECAM III) was used to estimate a binary choice model and productivity equation by instrumental variables. Firstly, the results suggest that there is a moral hazard in the investment behaviour of sharecroppers.This result could support the hypothesis of a holdup problem, which would reduce the incentives for agricultural households to make optimal investments. Secondly, the insecurity of land tenure contract would reduce the probability of purchasing modern equipment by about 0.44 and reduce the probability ofusing fertilizer by about 0.21. However, these investments determine the differences in term of productivity among agricultural household. Thus, the sharecroppers are less productive because they invest less than landlords. Therefore, it seems necessary to implement institutional mechanisms that can help to release the constraints on land access and to ensure the respect for rights and obligations between all the actors involved in agriculturalleases.

Suggested Citation

  • Niee Foning, Maxime & Kane, Gilles Quentin & Ambagna, Jean Joël & Fondo, Sikod & Abayomi Oyekale, Samuel, 2013. "The effect of incomplete land tenure contracts on agricultural investment and productivity in Cameroon," MPRA Paper 62752, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:62752
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    File URL: https://mpra.ub.uni-muenchen.de/62752/1/MPRA_paper_62752.pdf
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    References listed on IDEAS

    as
    1. Sarah Gavian & Marcel Fafchamps, 1996. "Land Tenure and Allocative Efficiency in Niger," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 460-471.
    2. Deininger, Klaus & Jin, Songqing, 2006. "Tenure security and land-related investment: Evidence from Ethiopia," European Economic Review, Elsevier, vol. 50(5), pages 1245-1277, July.
    3. Jean-Jacques Laffont & Mohamed Salah Matoussi, 1995. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," Review of Economic Studies, Oxford University Press, vol. 62(3), pages 381-399.
    4. Abhijit V. Banerjee & Paul J. Gertler & Maitreesh Ghatak, 2002. "Empowerment and Efficiency: Tenancy Reform in West Bengal," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 239-280, April.
    5. Hanan G. Jacoby & Guo Li & Scott Rozelle, 2002. "Hazards of Expropriation: Tenure Insecurity and Investment in Rural China," American Economic Review, American Economic Association, vol. 92(5), pages 1420-1447, December.
    6. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    7. Arcand, Jean-Louis & Ai, Chunrong & Ethier, Francois, 2007. "Moral hazard and Marshallian inefficiency: Evidence from Tunisia," Journal of Development Economics, Elsevier, vol. 83(2), pages 411-445, July.
    8. Menale Kassie & Stein Holden, 2007. "Sharecropping efficiency in Ethiopia: threats of eviction and kinship," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2‐3), pages 179-188, September.
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    More about this item

    Keywords

    Security of land tenure contracts; moral hazard; sharecroppers; holdup.;

    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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