ASSESS THE DYNAMIC IMPACT OF LAND REFORM ON POVERTY REDUCTION AND ECONOMIC GROWTH

• Sponsoring Institution: State Agricultural Experiment Station
• Project Status: COMPLETE
• Funding Source: STATE
• Reporting Frequency: Annual
• Accession No.: 0212693
• Project Start Date: Oct 1, 2007
• Project End Date: Sep 30, 2012
• Program Code: [(N/A)]- (N/A)

Recipient Organization
MICHIGAN STATE UNIV
(N/A)
EAST LANSING,MI 48824

Performing Department
Agricultural, Food, & Resource Economics

Non Technical Summary
Although few doubt that India land reform policies were necessary at independence and, overall, had a beneficial impact, the fact that reform land is restricted to transfer has become an increasingly important obstacle to growth and poverty reduction in India. This negative impact is increasingly so as the initial beneficiaries become old and many of their off-springs have comparative advantage in non-farm opportunities. The debate on India land policy has been quite ideological and dominated by anecdotal evidence and case studies based on hard-evidence are scare. The purpose of this study is to more precisely trace the incidence and time profile of land reform impacts, assess whether overlapping property rights and/or restrictions on the ability to transfer land received under land reform reduce productivity and investment and -if yes- quantify the magnitude of such effects, and identify realistic policies (e.g. credit to bilaterally negotiated buy-outs of one partyBBs rights by the other) that could help to eliminate these and thus make the gains from land reform sustainable.

Animal Health Component

(N/A)

Research Effort Categories

Basic

(N/A)

Applied

(N/A)

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
601	0120	3010	20%
601	5330	3010	15%
601	6120	3010	15%
606	0120	3010	20%
606	5330	3010	15%
606	6120	3010	15%

Knowledge Area
601 - Economics of Agricultural Production and Farm Management; 606 - International Trade and Development;

Subject Of Investigation
5330 - Farm structures and related facilities; 6120 - International economy and sectors thereof; 0120 - Land;

Field Of Science
3010 - Economics;

Keywords

land reform

rural india

west bengal

long-term impact

investment

productivity

asset accumulation

economic structure

land market restriction

market functioning;

Goals / Objectives
Land policy has been a highly controversial aspect in Indian, not surprising in view of the fact that, historically, land had been distributed in a highly unequal fashion and been used as a source of social domination. The debate had been highly ideological with very little hard empirical evidence. In this context, the project aimed to provide rigorous empirical analysis of (i) long-term impact of land access through land reform on households ability in accumulating land and other physical assets, human capital, and households economic structure; (ii) the impact of land reforms on investment and productivity; and (iii) the impact of land reform on the functioning of land markets.

Project Methods
To achieve these objectives, the project will combine a number of data sources that would provide historical depth (allowing to trace the same households back to the pre-reform period), coverage of most major issues (e.g., transactions of land and other physical assets over time, education, agricultural production and other economic activities), and inlcude enough households in the sample who cultivate reform land and other regular land at the same time. The first key data source for our analysis will be the national ARIS/REDS panel data sets that have been conducted by India National Council for Applied Economic Research (NCAER) since 1968. About 4,000 households in 240 villages all over India were first interviewed in 1968-1971 to evaluate the impact of an agricultural development program. Panel villages and households were re-visited in 1982 and 1999, and a 2007 resurvey is currently in the field. We will apply panel estimation technique to evaluate the long-term impact of access to reform land on households ability to accumulate human and physical assets, income generating opportunities and overall welfare. The second data source is a World Bank funded household survey of 2000 households from 200 villages in 18 districts of West Bengal. The survey is currently in the field and is being conducted by a survey firm in Kolkata. The survey was designed to include enough households who cultivate land reform land and other regular land at the same time. Detailed investment and production data (for reform land and other regular land) allow us to apply a fixed effect panel estimation technique to empirically test whether there is significant difference in investment and productivity between the land reform land and other regular land and if so by how much. The final data source is a listing data based on a complete listing of all the households from the 200 villages in 18 districts of West Bengal (conducted by the same survey firm in Kolkata). In addition to collecting the standard demographic information now and before the reform, the listing exercise also collected very detailed information land (dis-)accumulation history, current actual and desired rental and sales market participation. This provide a unique opportunity for us to assess the perceived severity of rental restrictions (or the likelihood of losing land that is rented out) as well as subjective demand for land to assess the severity of the restrictions and the incidence of problems.

Progress 10/01/07 to 09/30/12

Outputs
OUTPUTS: This project started in 2007 when I was a research economist in the World Bank's Research Unit. During the report period,we have completed a number of activities and produced a number of outputs. My collaborators and I were able to use a panel data set we assembled in an earlier period to explore a number of issues related to India's land reform which include (1) impact of reform regislations on the functioning of India's land rental markets; (2) consequences and determinants of India's land sale's markets; (3) discrimination of India's rural informal labor markets and (4) impact of land reform on productivity and poverty reduction. The analyses yielded five research papers among which one has been published in the European Economics Review, two has been accepted for publications in refereed journals (World Development and Journal of Development Studies), one was selected by AAEA for presentation in the 2008 AAEA annual meetings, and one is currently under reveiw. The various individual papers and studies employed different empirical and analytical methods and address different empirical topics. This work not only involves collaborators from the World Bank and from the study country of the project, it also directly involves the instruction and mentoring of graduate students. The main findings from this project were also presented in the 2008 American Economics Association Meetings and to a Friday Forum on campus (co-sponsored by the Center for Advanced Study of International Development Women and International Development Program at MSU). Another set of activities has been focused on preparing a new household survey that will allow us to examine the impact of land reform at the beneficiary level rather than at an aggregated level. I travelled to West Bengal, India during the last week of September to train the enumerators, to supervise a pretest and to develop the survey instruments. The data from the upcoming survey will be the main data source for one of my Ph.D. students dissertation. My work on India land reform is also related to my broader research agenda on the land tenure and land market studies in other developing countries. I am one of the key members of a Mozambique land titling impact evaluation project which is funded by the Millenium Challenge Cooperation (MCC). I travlled to Mozambique in late May to participate a planning meeting for the project. During this report period, I have also contributed 2 months to the development of evaluation methodology and the overall workplan for the Mozambique project. During the second week of December, I also travelled to China to organize and supervise a pretest for an upcoming land and labor survey in rural China. My collaborators from the World Bank and I are currently discussing with the Gates Melinda Foundation for a potential future research project to further explore the issues related to India's land reform. PARTICIPANTS: This is a collaborative project between MSU, the World Bank and NCAER. The World Bank provided financial support to activities related to data collection. NCAER is the local collaborative institute in New Delhi, India, responsible for the data collection. Klaus Deininger, a lead economist in the Rural Development Research Group of the World Bank, is my former colleague and long time collaborator. Klaus funded and supervised all the data collection and survey effort. Dr. Hari Nagarajan, a research fellow from the National Center for Applied Economic Research Center (NCAER), is our key local collaborator who managed and supported all the survey activities. Ms. Vandana Yadav is a Ph.D. student from MSU. TARGET AUDIENCES: Scholars who are interested in land reform and land tenure issues, government policy makers, International organizations and NGOs PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
While the main outputs of the project in terms of academic publications may need some time to show their impact, the main findings and conclusions from the project have lead to new knowledge about India's land reform, which is expected to have substantial implications for government's policy actions in the future. Though land reform has occupied the central stage of India government's policy agenda since its independence, knowledge about its impact on productivity,equity and long-term economic growth is very limited. While it is hotly debated whether the land reform that was implemented more than 30 years ago is still relevant for a much changed economic environment today, there is no hard evidence to guide the future direction for reform. The main findings of the project include (1) land reform had overall significant positive effects on economic growth and poverty reduction but the effects decayed over time and (2) the reform legislations signficantly reduced the functioning of rental markets, which considerably hurt both the efficiency and equity. These findings not only improve our knowledge on the impact of one of the largest redistritive policy in the world, it also points toward the immediate need for India's government to reinvestigate its land reform more carefully and redesign its future land policy in order to make the gains from the historical land reform more sustainable. My experience and knowledge in China and India's land tenure issues have also been recognized by outside organizations and individuals. For example, I was invited to give a presentation to the World Bank's workshop on land policy for growth in February 2008 and again to another workshop on land issues in March 2009. I have also been invited by the Gate Melinda Foundation to present land reform experience in China and India to a land policy convening in Seattle during January 15-16, 2009.

Publications

• Deininger, K., and S. Jin and X. Yu. 2007. Risk Coping and Starvation in Rural China. Applied Economics 39(11):1341-1352.
• Deininger,K., S. Jin and H. Hari. 2009. Determinants and consequences of land sales market participation: Panel evidence from India. World Development (forthcoming).
• Deininger,K., S. Jin and H. Hari. 2009. Land reforms, poverty reduction, and economic growth: evidence from India. Journal of Development Studies (forthcoming).
• Jin,S., C. H. Erika, R. Hu, S. Rozelle, and J. Huang. 2008. Contribution of Wheat Diversity to Total Factor Productivity in China. Journal of Agricultural and Resource Economics 33(3):449-472.
• Deininger,K., S. Jin and H. Hari. 2008. Equity and Efficiency Impacts of Rural Land Rental Restrictions: Evidence from India. European Economic Review 52(5):892-918.
• Deininger, K. and S. Jin. 2008. Land Sales and Rental Markets in Transition: Evidence from Rural Vietnam. Oxford Bulletin of Economics and Statistics 70(1):67-101.
• Deininger, K., and S. Jin and M. Sur. 2007. Sri Lanka's rural non-farm economy: Removing constraints to pro-poor growth. World Development 35(12):2056-2078.