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Land Rights, Power and Trees in Rural Ethiopia
Stefan
Dercon,
CSAE, University of Oxford
Daniel
Ayalew,
The World Bank
WPS/2007-07
ABSTRACT:
institutions of property rights, in particular related to land, are of crucial importance
for investment and growth. In Ethiopia, with all land state-owned, the threat of land
redistribution never appears far off the agenda. A constitutional reform in 1996 has
promised long-term user rights, and land rental and leasing have been made legal, but
land rights remain restricted and the perception of continuing tenure insecurity
remains quite strong. Using a unique panel data set including data on land right
perceptions over time, this study investigates whether land rights affect household
investment decisions, focusing on land allocation to coffee trees and other perennial
crops. The period of investigation covers a period of change in land right perceptions
after a constitutional change, a large scale but unexpected land redistribution episode
in one region and a start to land registration in another region, offering exogenous
variation to study the impact of tenure insecurity. Exploiting heterogeneity in the
impact of the policy turmoil, including linked to the local political economy of land
redistribution, the panel data estimates suggest a robust, causal negative impact of
transfer rights on long-term investment in Ethiopian agriculture, contributing to the
low returns from land and perpetuating low growth and poverty.
SUGGESTED CITATION:
Stefan Dercon and Daniel Ayalew,
"Land Rights, Power and Trees in Rural Ethiopia"
(April 1, 2007).
The Centre for the Study of African Economies Working Paper Series.
Working Paper 266.
http://www.bepress.com/csae/paper266
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