BlogGlobal Advocacy

Jun 20 2016

How land rights can grow the economy

This blog was originally published by Thomson Reuters Foundation News.

By Chris Jochnick | @cjochnick

At a time when too many governments are fixated on urban growth and agricultural consolidation, a research review by my colleagues on the links between secure and equitable rural property rights and macro-economic growth reveals a different and compelling narrative.

Global studies highlighted in a series of new fact sheets (Africa, Global, India), provide an important reminder that the path to sustainable and inclusive macro-economic development has been, from Denmark to Korea, through the creation of broadly distributed secure land rights for smallholder farmers.

Highlights of this research include:

A study of 33 countries found that stronger property rights were associated with a five percent increase in GDP growth.

A global study of 108 countries found that stronger property rights were associated with an increased average annual growth of per capita income by 6 to 14 percentage points.

Another global study of 101 countries found that more secure property rights were associated with higher private investment.

One significant caveat should be noted: secure property rights must be accompanied by policies and institutions that support the equitable access and use of property. The research is clear on this: strengthening property rights without complementary measures that include more equitable distribution of assets (namely land), can increase income inequality and ultimately have negative effects on macro-economic growth, especially in developing countries. Conversely, more secure property rights and equitable distribution of those benefits can fuel economic growth.

As just one example, state-level land reforms in India from 1982 to 1999 benefited society as a whole, sparking one-third of the economic growth during this period in the states in which a larger proportion of their population stood to benefit from the land reforms.

Indeed, when land rights for smallholder farmers, both women and men, are strong and broadly distributed, they can increase agricultural investment, reduce hunger, feed the rural poor and growing urban population, and promote equitable and inclusive growth.

They set the stage for gradual rural development, an increase in consumer demand, and urbanization as redundant but well-resourced farmers are pulled to the cities in search of greater opportunities.

Nevertheless, the myth that large, “modern,” mechanized farms are the only path to development has proved enduring. Leaders from across Asia and Africa have adopted a variety of well-intentioned but misguided policies to encourage, and in some cases force, the rapid urbanization of smallholders and the consolidation of farms.

A 2012 report by the UN focused on Mozambique’s experience with this model underscores that the “high number of negative impacts from recent large-scale land acquisitions in Mozambique give cause for concern,” and “a labor-intensive rural development strategy may be more suitable than the attraction of large-scale investments in farmland.”

Such policies risk repeating the mistakes of Brazil, Pakistan, the Philippines, and South Africa, where desperate families pushed into the cities by poverty and landlessness have created vast urban and peri-urban slums. This destabilizing underclass of city dwellers, nee former smallholder farmers, is often excluded from services and opportunity for generations.

By contrast, urbanization in Japan and South Korea, for example, has seen land-owning farmers (the beneficiaries of successful post-war land reforms) gradually shift to the urban sector, drawn by opportunity, with their land—or the resources gained from a market transfer of that land—as a source of income to ease their transition.

We know that farm size is not what is holding back countries eager for development. Instead, the most damaging constraints include smallholder farmers’ lack of access to new agricultural technologies (e.g. improved seeds and fertilizers), lack of credit, limited access to markets, and most importantly land tenure insecurity. . This is particularly true for women farmers who are most likely to have insecure rights to land but nevertheless play a critical and growing role in agriculture.

History has shown, and research supports, that smallholders can, in a wide range of settings and with the right support from national governments, not only substantially increase their agricultural productivity, but also power broad economic growth — growing the economy and a better future for themselves and their country.

Chris Jochnick is President and CEO of Landesa.

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