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Land Reform in Developing Countries: Property Rights and Property Wrongs

Author(s):Lipton, Michael
Reviewer(s):Otsuka, Keijiro

Published by EH.Net (November 2012)

Michael Lipton, Land Reform in Developing Countries: Property Rights and Property Wrongs. London: Routledge, 2009. xv + 456 pp. $45 (paperback), ISBN: 978-415-61556-3.

Reviewed for EH.Net by Keijiro Otsuka, National Graduate Institute for Policy Studies (Tokyo)

This is a truly comprehensive study on land reform in developing countries including those in South and Southeast Asia, West and Central Asia, North and sub-Sahara Africa, and Latin America. Readers will be overwhelmed by the vast amount of relevant knowledge the author has on land tenure issues in general and on land reform issues in particular. It is also amazing to learn that this voluminous book has been prepared by the author alone without any research assistant.

Chapter 1 is concerned with the main goal of land reform, which is the reduction of poverty and income inequality by substantially increasing the proportion of farmland controlled by the poor. The redistributive land reform that transfers ownership rights from large landlords to landless or marginal farmers is also expected to contribute to the enhancement of production efficiency because smaller farmers are more productive than larger farmers. This is reflected in the inverse relationship between farm size and yield per hectare widely observed in low-income countries. As discussed intensively in chapter 2, smaller farms, which rely mainly on family labor, have advantages over larger farms, which depend heavily on hired labor, because of the high monitoring cost of hired labor in spatially dispersed agricultural production environments. As a result, small farms apply more labor per unit of land. Thus, the redistribution of land increases the income of the poor by increasing the demand for labor and conferring income from land to the formerly land-poor farmers. The author asserts that, ?At least 1.5 billion people today have some farmland as a result of land reform, and are less poor, or not poor, as a result? (p. 8).???

The author is supportive of ?classic? land reform, which sets land ownership ceilings and redistributes land in excess of the ceilings to the poor farmers, particularly tenants. He argues that classic land reform (CLR) ?has spread much further, and with more success, than is widely believed? (p. 7) and ?has a huge and largely successful record? (p. 127), even though he recognizes that it has faced many difficulties due to landlords? efforts to evade and avoid the implementation of such reform. He goes on to argue that unlike market-assisted and other land reforms as well as progressive land taxes discussed in chapter 6, CLR is incentive compatible as it sets up incentives that reinforce its redistributive intentions (p. 146) ? an argument which is difficult to interpret for the present reviewer. He does not support tenancy and other tenurial reforms (e.g., laws against share tenancy, setting fixed rent at a low level, and titling), because ?keeping the land concentration unchanged, … tenurial reforms are unlikely to benefit the poor? (p. 151), which is intensively discussed in chapters 3 and 4 on the type of land reforms and tenurial options.

One of the book?s difficulties is the weak evidence on the implementation of CLR dealt with in the final chapter (chapter 7), despite the author?s claim that ?chapter 7 shows that great areas have been reassigned from the above-ceiling holdings of large landowners to the rural poor? (p. 148). Since accurately measuring the extent of land reform implementation is a formidable task due to its evasion by the politically powerful landed class, we need ?hard? evidence based on careful empirical studies. On this criterion, the evidence presented in chapter 7 is far from adequate.

I am skeptical of the effectiveness of CLR as a policy to reduce rural poverty because CLR confers benefits directly to tenants but not to agricultural laborers, who are the poorest in poor rural societies. Although the author argues that ?genuine land redistribution … raises farmers? demand for labor? and, hence, ?improves wage incomes of hired laborers, even if they get no land? (p. 23), the strength of such an effect is unclear. If the goal of land reform is to reduce poverty, how can we justify the exclusion of agricultural laborers from the target of land reform?

A more serious question is whether the inverse relationship is an exogenously determined and unavoidable phenomenon in agriculture in low-income countries. It must be recognized that both redistributive land reform and tenancy reform ?distort? land markets and suppress land transactions. For example, since the land is supposed to be transferred to the tenant under the redistributive land reform, landlords are unwilling to offer land rental contracts. Such behavior strengthens the inverse relationship by facilitating large landowners? inefficient self-cultivation and suppressing small farmers? efficient cultivation. In fact, the inverse relationship is more widely observed in South Asia than in Southeast Asia, possibly because land reforms were more seriously implemented in the former than in the latter. It may well be that the inverse relationship is more a consequence of CLR than the sound basis to support the implementation of CLR.

I fully concur with the author?s conclusion that ?land reform, as a central poverty-reducing idea for very unequal farm-based economies, does not ?die? until they become either much less unequal or much less farm-based? (p. 297). This is all the more so considering that unequal land distribution was created mostly by colonialism and land grabs in the past, not by the land purchase of presently large landowners. As Lipton recognizes (see e.g., p. 297), however, CLR has many negative effects, such as the suppression of land rental transactions and land sales even by land reform beneficiaries wanting to migrate, because of the prohibition of land transactions to avoid the re-emergence of land inequalities. The point is that rather than advocating CLR uncritically, we should seek more socially desirable and effective land reform programs which minimize the negative effects on the efficiency of agricultural production and the equity of income distribution.?

Keijiro Otsuka has served as President of the International Association of Agricultural Economists, and is the coauthor or coeditor of 17 books on land tenure, the Green Revolution, natural resource management, and other microeconomics issues in Asia and sub-Saharan Africa.

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Subject(s):Agriculture, Natural Resources, and Extractive Industries
Geographic Area(s):Africa
Asia
Latin America, incl. Mexico and the Caribbean
Time Period(s):20th Century: WWII and post-WWII