Trade and Development Blog

The BBC reports : Daewoo leased the vast tract of land - which is half the size of Belgium - for 99 years and hopes to produce 5m tonnes of corn a year by 2023. ...It will manage the plantations directly and use South African labour. My first reaction is "wow!" this could potentially demonstrate how trade and foreign direct investment can bring new technologies and agricultural practices to Madagascar that could help to raise local incomes. My second reaction however is, who did Daewoo lease half of the arable land in Madagascar from!? My understanding, from reading a few papers on the topic (such as this one ) is that while Madagascar is most certainly a land abundant country with very low productivity agriculture, it is also true that local communities have property rights claims to the land that they have used as farmers or pastoralists. Madagascar has in fact been supposedly recognizing and titling these claimants. The question then is from who did Daewoo lease this ...

    There is no doubt that conflict can lower economic activity by raising insecurity and draining labor and talent out of productive activities and into military/criminal/redistributive activities. Economists have long recognized this possibility and pointed out that the likelihood of conflicts depends, amongst other things, on the relative returns.     Ray Fishman over at Slate summarizes a nice recent research paper by economists Oeindrila Dube and Juan Vargas which looks at the relationship between commodity prices and conflict in Colombia.  Fishman's  post is entitled "Will there be blood? Will falling commodity prices cause civil war?"  There are two opposing forces.  A few excerpts:  ...Poor farmers impoverished by lower crop prices may be eager recruits for rebel groups who can promise a better livelihood from stolen loot than what the soil can provide (not to mention protection from pillaging, since unaligned farmers may be easy prey for either rebels or governm...

The New York Times has a story today on important property rights reforms that are being considered in China. Right now all rural lands are state owned, but under the control of village governments. Individual peasant cultivators could enter into long term leases with their local governments, but they had relatively little in the way of protection for their investments (e.g. the local government could revoke the lease) and little or no ability to lease out or sell the rights to their rental. This appears to be about to change. Lease lengths may be lengthened and it seems households will be able to sub-lease or perhaps even sell their 'rights' to the lease. This is a long (but still cautious) step toward establishing a land market. As the article explains: Many farmers work on tiny, state-allocated plots of land for a small fraction of the year, investing little in agriculture. While they are entitled to 30-year land-use contracts, the state retains ownership of rural ...