Land inequality and growth: the risks of large scale land acquisitions

The article presents evidence on land acquisitions in Africa. Acquisitions, especially FDI, are mostly very large scale and our econometric evidence shows that investments are more attracted to countries with complex systems of property rights. Because of neglected rights land may appear more abundant (empty) than it actually is. Furthermore the fact that authorities retain a central role in making land eventually available to private investors may reinforce the impact of the prevalent property structure in determining a pattern of acquisitions characterized by deals of very large size. Next the article reviews the literature on inequality and growth, and applies meta-analysis to the subset of studies that have focused on the impact of land inequality on long term growth. This literature has firmly established a strong role of land inequality as a determinant of income inequality, and the negative impact of land inequality on long term growth, and also that inequality in assets ownership, once established, is very difficult to reverse. Most of the recent debate on the risk of large scale land acquisitions in developing countries has concentrated on the potential losses for users . We contend that in the light of the data and of the economic debate on land inequality and growth a crucial issue is whether foreign capital flows in conjunction with state landlordism in Africa may result in a development path that is “excessively” geared towards large farms and land concentration.