“The path to prosperity starts with land reform”, says the Economist

It’s not often that the Economist magazine sings the praises of radical land reform. But on October 12th, the Banyan column on Asia proclaimed: “the path to prosperity starts with land reform”. The article caught my attention, and I read on. Vital reading for all those contemplating the new post Mugabe Zimbabwe.

The piece starts with some stats on economic growth in Asia, and the contrast with Africa and Latin America. It outlines the standard (for the Economist at least) explanations: market-friendly policies, capital accumulation, training and skill development, the importance of institutions and so on. But goes on to argue that the restructuring of agriculture through land reform is an underplayed explanation (of course not a new argument – see Michael Lipton, and many others, on land reform experiences).

“Radical action may be necessary in countries with big, impoverished, rural populations”, the article argues. Wow, this doesn’t sound like the Economist, I thought! It goes on to give the example of China.

“By the 1920s, a tenth of the population owned over seven-tenths of the arable land. Three-quarters of farming families had less than a hectare. Mao Zedong’s Communists reallocated land in every new territory they seized. After the defeat of the Kuomintang (KMT) in 1949, they rolled out land reform nationwide….The effect was immediate. Grain output leapt by perhaps 70% in the decade after the war. When farmers can capture most of the value of their land, they have a powerful incentive to produce. And while smallholder agriculture is hugely labour-intensive, that makes sense when labour is abundant”.

China’s experience encouraged Japan, South Korea and Taiwan to follow. Agriculture boomed. Landed elites of course resisted, compensation was inadequate, and sometimes violence ensued, although not on the scale meted out in China, and in Russia before. In the East Asian countries outside China, land reform was supported by the US (yes, the US was a great advocate back then; how times change!).

The article goes on to explain how Taiwan shows the clearest benefits from land reform:

“[Land reform] started with rent controls and reforms to tenancy. Sales of formerly Japanese-owned land followed. Then, in 1953, came appropriation. The share of land tilled by the owner rose from just over 30% in 1945 to 64% in 1960. Yields on sugar and rice leapt. New markets sprang up for exotic fruits and vegetables. Household farmers dominated early exports. Crucially, income inequality shrank thanks to the new farmer-capitalists. Less spent on imports of food, more money in Taiwanese pockets, a new entrepreneurialism: farming was the start of Taiwan’s economic miracle”.

What happened elsewhere? “Indonesia, Malaysia and Thailand could have followed Taiwan’s example, but didn’t. Their economies have done far worse”, the article states. In these countries because of extensive rural, agricultural populations, land distribution matters. Yet “the state favours agribusiness and plantations over small farmers. There is a yawning gap in income between countryside and city”.

Inequality in land has political consequences too: “In South Korea and Taiwan inclusive agricultural growth prefigured the inclusive politics of today’s thriving democracies”. Again by contrast in Southeast Asia, “cronyism and inertia are consequences of an economy that is unfair to those at the bottom”. This has costs in terms of “insurgencies and rural unrest”. If done well, the article concludes, land reform starts to look cheap.

The Economist seems to have joined the ranks of the radical agrarianistas. What has happened? Well, actually not a lot. The economic arguments about agrarian transition have long been made, and the need for equality before growth is well established. Incentives to invest, and the labour-intensive features of smallholder agriculture have long been understood. The experience of Zimbabwe’s land reform offers some pointers, especially from the smallholder A1 farms. The problem is that in the current narrative of agricultural development, big is beautiful, multinational agribusiness investment and finance is essential, and global markets are all – as with Africa’s agricultural growth corridors discussed a few weeks ago.

This narrative is seemingly endlessly promoted by donors (DFID and USAID seem obsessed currently), alongside national governments and political elites, all keen to attract land investment deals. Sometimes there are ‘pro-poor’ tweaks to the narratives; more often it’s old-fashioned external investment, growth and trickle down. This all has somehow drowned out the long-established conventional wisdom and lessons from history that radical, redistributive land reform makes economic (and political and social) sense in many settings.

Of course Asia is different to Africa, and the 1940s different to today, but the basic arguments made many, many times before of course are worth repeating, and the lessons of history worth learning. In none of the positive cases of land reform from Asia did success spring up overnight, but they emerged from intensive, thoughtful state support, and backed (in some cases) by external donors (of course interested more in geopolitics than poor people’s livelihoods, but…).

In Zimbabwe, these conditions have not applied over the last 17 years, and the continued decline in economic conditions and state capacity of any sort, is a tragedy. This now may all change. With the euphoria of change, and in the presence of no doubt much international interest in Zimbabwe, we should not forget the basic argument that land reform can bring prosperity, and the failure to undertake radical land reform can bring many costs, in both the short and long-term. Zimbabwe now has the opportunity to make the most of its land reform.

This post was written by Ian Scoones and first appeared on Zimbabweland