The Effects of Political Competition on Rural Land: Evidence from Pakistan

44 Pages Posted: 24 Jul 2015

See all articles by Katrina Kosec

Katrina Kosec

International Food Policy Research Institute (IFPRI)

Hamza Haider

International Food Policy Research Institute (IFPRI)

David J. Spielman

International Food Policy Research Institute (IFPRI)

Fatima Zaidi

International Food Policy Research Institute (IFPRI)

Date Written: May 26, 2015

Abstract

Can more vigorous political competition significantly raise rural land values, or contribute to more robust land rental markets? Exploiting exogenous variation in the national popularity of Pakistan’s political parties during the 2008 elections, we show that provincial assembly constituencies with greater competition between political parties had significantly higher land values and more active land rental markets four years later. A standard deviation decrease in a Herfindahl–Hirschman Index (HHI) of political concentration is associated with a 36 percent increase in land values, an 8 percentage point increase in the share of landowners renting out land, and an additional 4 percentage points of each landowner’s land being rented out. Land values appear to increase most among the poorest households, suggesting that benefits are greatest for those with the fewest resources to influence policy. Exploring potential causal mechanisms, we show that political competition leads to more stable and business-friendly governance and institutions, better amenities, and greater provision of publicly provided goods. The effect of political competition on security is ambiguous, suggesting that political competition may decrease security along some dimensions and increase it along others.

Keywords: prices; land markets; rural areas; governance; agricultural policies

JEL Classification: Q11; H40; Q18; H11

Suggested Citation

Kosec, Katrina and Haider, Hamza and Spielman, David J. and Zaidi, Fatima, The Effects of Political Competition on Rural Land: Evidence from Pakistan (May 26, 2015). IFPRI Discussion Paper 1441, Available at SSRN: https://ssrn.com/abstract=2623604 or http://dx.doi.org/10.2139/ssrn.2623604

Katrina Kosec (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Hamza Haider

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

David J. Spielman

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Fatima Zaidi

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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