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Research on land markets in South Asia : what have we learned?

  • Faruqee, Rashid
  • Carey, Kevin

The authors review the literature on land markets in South Asia to clarify what's known and to highlight unresolved issues. They report that: (1) We have a good understanding of why sharecropping persists and why it can be superior to other standard agricultural contracts. We have less understanding of what determines the relative efficiency of sharecropping in different environments and why other apparently superior contractual relationships are rare. (2) Insecure rights to land adversely affect production and investment incentives in areas outside of South Asia, but in South Asia strong evidence linking investment and rights to production is scarce. (3) An inverse relationship between farm size and output per unit area is a recurrent feature in data from South Asia, apparently related to land-labor interactions. (4) Although small farms seem to be more efficient than large ones, small farmers have trouble raising their profitability and enlarging their holding, largely because of credit constraints, but also because of poverty and policy that discriminates against them. (5) Misguided land reform in the past has made tenancy unattractive to landowners, so large capital-intensive farms have developed. Political economic analysis is needed to explain the failure of past land reform, as well as distortions in agricultural input and output markets in (6) South Asia. Land fragmentation (as distinguished from farm size) has caused productivity losses. Those losses have not been quantified and the reasons fragmentation persists are poorly understood. (7) Transaction costs are a significant impediment to functioning land markets. In South Asia, transfers of land rights are complicated by lack of explicit title to land, and by informal and customary rights. (8) One pressing research problem is gender discrimination, an important factor in land market imperfections -especially (within the household) the separation of land management and its control. Research needs include more systematic regional comparisons, the use of more panel data, and an investigation of how agricultural productivity is affected by gender problems and land fragmentation.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1754.

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Date of creation: 30 Apr 1997
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Handle: RePEc:wbk:wbrwps:1754
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  1. Laffont, Jean-Jacques & Matoussi, Mohamed Salah, 1995. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," Review of Economic Studies, Wiley Blackwell, vol. 62(3), pages 381-99, July.
  2. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1993. "Power, distortions, revolt, and reform in agricultural land relations," Policy Research Working Paper Series 1164, The World Bank.
  3. Shetty, Sudhir, 1988. "Limited liability, wealth differences and tenancy contracts in agrarian economies," Journal of Development Economics, Elsevier, vol. 29(1), pages 1-22, July.
  4. Stiglitz, Joseph E., 1986. "The new development economics," World Development, Elsevier, vol. 14(2), pages 257-265, February.
  5. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
  6. Lanjouw, Peter & Ravallion, Martin & DEC, 1994. "Poverty and household size," Policy Research Working Paper Series 1332, The World Bank.
  7. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
  8. Bell, Clive & Srinivasan, T N, 1989. "Interlinked Transactions in Rural Markets: An Empirical Study of Andhra Pradesh, Bihar and Punjab," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(1), pages 73-83, February.
  9. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 893-920, October.
  10. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  11. Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, vol. 46(1), pages 51-84, February.
  12. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October.
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