Land Reform: A Foundation for Industrial Growth in Developing Countries?

Abstract

In this paper I examine whether or not land reform can contribute to growth in the agricultural surplus of developing countries. There are two possible channels where we might expect an effect: the first is agricultural productivity and the second is “on farm consumption”. I start with an introduction to the theories on the relationship between agrarian structure and farm productivity. The theoretical literature on the effects of land reform on productivity is inconclusive. Therefore, I perform an empirical test on the relationship. I find that land reform is at least not detrimental to productivity. Next I provide a short summary of the literature on the relationship between land reform and “on farm consumption”. This literature is more conclusive. My conclusion suggests that land reform can have a positive effect on agricultural surplus (and thereby on industrialization) through both growth and redistribution.