Klaus Deininger

New ways of looking at old issues: inequality and growth

Abstract The paper uses new cross-country data on income and asset (land) distribution to show that (i) there is a strong negative relationship between initial inequality in the asset distribution and long-term growth; (ii) inequality reduces income growth for the poor, but not for the rich; and (iii) available longitudinal data provide little support for the Kuznets hypothesis. Policies that increase aggregate investment and facilitate acquisition of assets by the poor might thus be doubly beneficial for growth and poverty reduction.

Rising global interest in farmland : can it yield sustainable and equitable benefits?

Interest in farmland is rising. And, given commodity price volatility, growing human and environmental pressures, and worries about food security, this interest will increase, especially in the developing world. One of the highest development priorities in the world must be to improve smallholder agricultural productivity, especially in Africa. Smallholder productivity is essential for reducing poverty and hunger, and more and better investment in agricultural technology, infrastructure, and market access for poor farmers is urgently needed. When done right, larger-scale farming systems can also have a place as one of many tools to promote sustainable agricultural and rural development, and can directly support smallholder productivity, for example, throughout grower programs. However, recent press and other reports about actual or proposed large farmland acquisition by big investors have raised serious concerns about the danger of neglecting local rights and other problems. They have also raised questions about the extent to which such transactions can provide long-term benefits to local populations and contribute to poverty reduction and sustainable development. Although these reports are worrying, the lack of reliable information has made it difficult to understand what has been actually happening. Against this backdrop, the World Bank, under the leadership of Managing Director Ngozi Okonjo-Iweala, along with other development partners, has highlighted the need for good empirical evidence to inform decision makers, especially in developing countries.

Does cost of schooling affect enrollment by the poor? Universal primary education in Uganda

Abstract The paper evaluates the impact of Uganda’s program of “Universal Primary Education” which, starting from 1997, dispensed with fees for primary enrollment. We find that the program was associated with a dramatic increase in primary school attendance, that inequalities in attendance related to gender, income, and region, were substantially reduced, and that school fees paid by parents decreased at the primary but not at the secondary level. At the same time, the general decline in the quality of education suggests that, in order to lead to sustained improvements in attendance and to transform these into higher levels of human capital, the policy needs to be complemented by improvements in school quality and accessibility of secondary education.

The rise of large farms in land abundant countries : do they have a future ?

Increased levels and volatility of food prices has led to a surge of interest in large-scale agriculture and land acquisition. This creates challenges for policy makers aiming to establish a policy environment conducive to an agrarian structure to contribute to broad-based development in the long term. Based on a historical review of episodes of growth of large farms and their impact, this paper identifies factors underlying the dominance of owner-operated farm structures and ways in which these may change with development. The amount of land that could potentially be available for expansion and the level of productivity in exploiting available land resources are used to establish a country-level typology. The authors highlight that an assessment of the advantages of large operations, together with information on endowments, can provide input into strategy formulation at the country level. A review of recent cases of land acquisition reinforces the importance of the policy framework in determining outcomes. It suggests that transparency and contract enforcement, recognition of local land rights and ways in which they can be exercised, attention to employment effects and technical viability, and mechanisms to re-allocate land from unsuccessful ventures to more productive entrepreneurs are key areas warranting the attention of policy makers.

Challenges posed by the new wave of farmland investment

Despite recent headlines about the ‘land rush’, scant empirical evidence implies that the debate is often theoretical and dominated by preconceived notions. To provide evidence that could better inform the debate, this paper focuses on three areas. First, we find that new land demand, which skyrocketed after the 2007/08 commodity price spike, remained at high levels, with a strong focus on Africa, and often countries with weak land rights protection. Some countries transferred large areas to investors, frequently locals, with limited benefits and in many cases negative impact due to weak processes and limited capacity. Second, complementing the focus on demand with an assessment of agro-climatic potential point towards major scope for productivity increase on currently cultivated areas and allows identification of countries where demand for land expansion may concentrate. Finally, comparative analysis of country policies highlights the need for recognition of existing rights, an emphasis on voluntary transfers, transparency, and thorough review of economic, social, and environmental viability as necessary—though by no means sufficient—conditions to reduce the likelihood of negative impacts.

Making Negotiated Land Reform Work: Initial Experience from Colombia, Brazil and South Africa

Abstract The paper describes background, initial experience, and future challenges associated with a new “negotiated” approach to land reform. This approach has emerged as, following the end of the Cold War and broad macroeconomic adjustment, many countries face a “second generation” of reforms to address deep-rooted structural problems and provide the basis for sustainable poverty reduction and economic growth. It reviews possible theoretical links—through credit market or political channels—between asset ownership and economic performance. Program characteristics in each country, as well as lessons for implementation, and implications for monitoring and impact assessment are discussed.

Land Sales and Rental Markets in Transition: Evidence from Rural Vietnam*

The extent to which households should be allowed to transfer their land rights in post-socialist transition economies is of considerable policy interest. The authors use data from Vietnam, a transition country that allows rental and sales of land use rights, to identify factors conducive to the development of land markets and to assess the extent to which land transfers enhance productive efficiency and transfer land to the poor. They find that activity in both rental and sales markets has increased rapidly, enhanced by the possession of long-term use rights and off-farm employment, and contributing to greater equity and efficiency of land use. While there is evidence for distress sales by households that experience a shock (death), the scope for such sales is reduced by well-functioning credit markets. Well-defined land rights and appropriate safety nets will thus help transition economies to realize the benefits from the operation of land markets.

AIDS-Induced Orphanhood as a Systemic Shock: Magnitude, Impact, and Program Interventions in Africa

Abstract According to many descriptive accounts, the orphan crisis in Africa has assumed alarming proportions, largely due to AIDS-related deaths. Using household panel data from Uganda to confirm this and assess the impact on affected households and children, we find that (a) receiving a foster child leads to a significant reduction of investment; (b) initial disadvantages in foster children’s access to education were largely eliminated by the introduction of a program of Universal Primary Education; and (c) new inequalities have emerged in foster children’s access to health services. Even though this suggests that specific programs could help to alleviate some of the negative impacts of orphanhood, the policy response in many African countries has remained piecemeal. We use data from existing programs to estimate the cost of a concerted policy response and highlight implications for further research.

Poverty, Policies, and Deforestation: The Case of Mexico

This study examines the determinants and policy implications of deforestation in Mexico and includes a brief review of the relevant empirical literature and a description of the theoretical model. Land use patterns and socioeconomic and physiogeographic factors are determinants. Data were obtained from digital maps of land use and soils and the 1990 Population and 1991 Agricultural Censuses. A simple 2-period equation formalizes the relationship between deforestation and poverty government policies and local land tenure. In Period 1 representative producers in municipalities have 4 options in allocating labor time: wage generation; agricultural production; deforestation on land without clear property rights; and investment in technology. During Period 2 the options are to farm on available land and deforested areas or work in the wage sector. Findings reveal that: 1) communal land tenure (ownership by the ejido) did not increase deforestation; 2) pricing that favors maize production which is very land intensive increased deforestation and technical assistance reduced deforestation; and 3) poverty was related to higher rates of deforestation. Prices were the most important immediate factor in unsustainable resource use but other factors had an impact. The government policy mix did not support sustainable development. Reduced subsidies would benefit the environment. The government should provide safety nets to increase the level of rural investment and reduce poverty and should improve land productivity with technical inputs. Trade liberalization and elimination of subsidies should be sensitive to the poors need for real wages.

South African land policy: The legacy of history and current options

Abstract The highly dualistic farm structure of South Africa and the low productivity of native African farmers have been the result of systematic distortions in land allocation, output markets, the provision of infrastructure, agricultural credit, and services. The dualistic structure did not emerge because of genuine economies of scale in the large commercial sector. Other countries in Latin America and Africa that once supported a dualistic farm size structure through similar distortions have either implemented large-scale land reforms or have experienced decades of peasant revolts and civil war. The paper compares these international experiences to South Africa, and outlines judicial and market-assisted approaches to South African land reform.