What Drives the Global"Land Rush"?

33 Pages Posted: 20 Apr 2016

See all articles by Rabah Arezki

Rabah Arezki

International Monetary Fund (IMF)

Klaus Deininger

World Bank - Development Economics Group (DEC); World Bank - Development Research Group (DECRG)

Harris Selod

National Institute for Agricultural Research (INRA); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); The World Bank; Paris School of Economics (PSE); World Bank - Development Research Group (DECRG)

Date Written: October 1, 2011

Abstract

The 2007-2008 upsurge in agricultural commodity prices gave rise to widespread concern about investors causing a "global land rush" . Large land deals can provide opportunities for better access to capital, transfer of technology, and advances in productivity and employment generation. But they carry risks of dispossession and loss of livelihoods, corruption, deterioration in local food security, environmental damage, and long-term social polarization that led some countries to recently pass legislation restricting foreign land acquisition. To stimulate evidence-based debate, this paper explores determinants of foreign land acquisition for large-scale agriculture. It quantifies demand for land deals, showing it focused on Africa where land expansion is about 20 times the level it was in the past. The analysis usesdata on bilateral investment relationships, together with newly constructed indicators of agro-ecological suitability in non-protected and forested areas with low population density as well as land rights security. It estimates gravity models that can help identify determinants of foreign land acquisition dedicated to large-scale agriculture. The results confirm the central role of agro-ecological potential as a pull factor. In contrast to the literature on foreign investment in general, the quality of the business climate is insignificant, whereas weak land governance and tenure security for current users make countries more attractive for investors. Implications for policy are discussed.

Keywords: Banks & Banking Reform, Emerging Markets, Debt Markets, Rural Land Policies for Poverty Reduction, Forestry

Suggested Citation

Arezki, Rabah and Deininger, Klaus and Selod, Harris, What Drives the Global"Land Rush"? (October 1, 2011). World Bank Policy Research Working Paper No. 5864. Available at SSRN: https://ssrn.com/abstract=1952493

Rabah Arezki (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Klaus Deininger

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/kdeininger

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Harris Selod

National Institute for Agricultural Research (INRA) ( email )

147, rue de l'Universite
Paris Cedex 07, 78-Yvelines 75338
France
+33 1 4313 6365 (Phone)
+33 1 4313 6362 (Fax)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

The World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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