Some General Theory about Land Reforms with a Latin American Case

Abstract

First we define a typology of land reforms throughout history, recurring to a politico economic approach, making a survey of this event. Then, we define a general setting, a theoretical framework (matrix), for socio-economic achievements of land reforms. Then we assess the role of land reforms in the recent past (1980s onwards) in Latin America, defining particularly the case-study of Brazil, where we assess the role of the “Cédula da Terra” (Land Bill) versus the Landless Movement (MST). The main empirical findings are that human capital, credit, technical assistance, household agrarian self-consumption are consistent with further economic growth due to market led land reform - This is in line with our previous empirical published work as in Magalhães et al. (2011). Focusing on the work of Rocha de Sousa (2012) which developed a formal model of land reform using Arrow (1962) and Jovanovic (1985) we further develop an endogenous land reform growth model based upon Lipton (2009). This endogenous land reform model presents an equilibria in the equity/efficiency quadrant, which can be further used to analyse comparative statics exercises, like growth of population, decreasing and increasing returns, technical progress. Thus, we conclude that land reform can yet been used as a modern tool to spur growth and development, but with our approach we can define the main limits and constraints that can block this growth. This Arrowian setting of Land Reform, yet unpublished is still one of the main novelties of the paper. Besides the formal Liptonian model (2009), our generalization is rather useful for policy perspectives. Even though theoretical, this approach, we can conclude that a raise in undifferentiated wages after land reform leads to an unrecoverable society welfare loss; thus yielding a lesson to political agents decision-makers elected after land reforms –wage raise land reform should not be used as an electoral motto.