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Land Inequality and the Transition to Modern Growth
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Land Inequality and the Transition to Modern Growth

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  • Tasso Adamopoulos

    (York University)

Abstract

Can the initial distribution of land, in a country's early history, affect its subsequent economic development? In this paper, I show that when land ownership is sufficiently concentrated, the landed elite will lobby the government to raise barriers to industrialization in order to protect its rents in the rural economy. I develop a small open economy model in which barriers take the form of tariffs on the imports of intermediate inputs used in industry. Such tariffs can affect both the timing and the pace of industrialization. The quantitative application of the theory is motivated by an important question in economic history: why did Argentina not replicate Canadian economic success, despite reasonable expectations to the contrary in the late 19th century? I provide evidence that Argentina had a markedly higher inequality in land ownership than Canada. Taking as given the observed differences in land distributions in the early 20th century, the model produces differences in equilibrium tariffs similar to the ones observed at the time, and the ones required to account for the Canadian-Argentine income gap until 1950. Over time however, as land becomes unimportant in production, land inequality ceases to be a source of policy disparities and income gaps. (Copyright: Elsevier)

Suggested Citation

  • Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April.
    • Handle: RePEc:red:issued:06-37
    DOI: 10.1016/j.red.2007.07.004
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    4. Akerman, Anders & Larsson, Anna & Naghavi, Alireza, 2011. "Autocracies and Development in a Global Economy: A Tale of Two Elites," Research Papers in Economics 2011:24, Stockholm University, Department of Economics.
    5. Tasso Adamopoulos & Diego Restuccia, 2020. "Land Reform and Productivity: A Quantitative Analysis with Micro Data," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(3), pages 1-39, July.
    6. Beltrán Tapia, Francisco J. & Díez Minguela, Alfonso & Martinez-Galarraga, Julio & Tirado-Fabregat, Daniel A., 2021. "The roots of land inequality in Spain," IFCS - Working Papers in Economic History.WH 31728, Universidad Carlos III de Madrid. Instituto Figuerola.
    7. Martinelli, Pablo, 2014. "Latifundia revisited: Market power, land inequality and agricultural efficiency. Evidence from interwar Italian agriculture," Explorations in Economic History, Elsevier, vol. 54(C), pages 79-106.
    8. Droller, Federico & Fiszbein, Martin, 2021. "Staple Products, Linkages, and Development: Evidence from Argentina," The Journal of Economic History, Cambridge University Press, vol. 81(3), pages 723-762, September.
    9. Thomas Baudin & Robert Stelter, 2016. "Rural exodus and fertility at the time of industrialization," LIDAM Discussion Papers IRES 2016020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Doupe, Patrick, 2014. "Reduced deforestation and economic growth," Working Papers 249421, Australian National University, Centre for Climate Economics & Policy.
    11. Vitantonio Mariella, 2023. "Landownership concentration and human capital accumulation in post-unification Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1695-1764, July.
    12. Fergusson, Leopoldo, 2013. "The political economy of rural property rights and the persistence of the dual economy," Journal of Development Economics, Elsevier, vol. 103(C), pages 167-181.
    13. Martin Fiszbein, 2017. "Agricultural Diversity, Structural Change and Long-run Development: Evidence from the U.S," NBER Working Papers 23183, National Bureau of Economic Research, Inc.
    14. Shangshang Li, 2024. "What Hinders Structural Reforms?," Working Papers 202404, University of Liverpool, Department of Economics.
    15. Martin Fiszbein, 2022. "Agricultural Diversity, Structural Change, and Long-Run Development: Evidence from the United States," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(2), pages 1-43, April.
    16. Patrick Doupe, 2014. "Reduced Deforestation and Economic Growth," CCEP Working Papers 1402, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    17. Vito Ricci & Giacomo Zanibelli, 2021. "For a Multidimensional Measure of Land Inequality in 1930s Italy. A Historical-Statistical Analysis," Documentos de Trabajo (DT-AEHE) 2107, Asociación Española de Historia Económica.
    18. Huang, Senwei & Zhang, Yaoqi & Zheng, Yifang & Su, Shipeng & Zheng, Jing, 2019. "Inequality and small landholdings: Path dependence, land use and wellbeing," Forest Policy and Economics, Elsevier, vol. 98(C), pages 62-66.
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    More about this item

    Keywords

    Income differences; Tariffs; Land inequality; Lobbying;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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