This article provides evidence from one of the poorest countries in the world that the institutions of property rights matter for efficiency, investment, and growth. With all land state-owned, the threat of land redistribution never appears far off the agenda. Land rental and leasing have been made legal, but transfer rights remain restricted and the perception of continuing tenure insecurity remains quite strong. Using a unique panel data set, this study investigates whether transfer rights and implied tenure insecurity affect household investment decisions, focusing on trees and shrubs. The panel data estimates suggest that limited perceived transfer rights negatively affects the long-term investment in Ethiopian agriculture, contributing to the low returns from land and perpetuating low growth and poverty.
Abstract: April 1999 - The sensitivity of empirical results to potential data errors and model misspecification can yield misleading policy implications and investment signals. A widely disseminated study of the impact of the training and visit (T&V) system of management for extension services in Kenya is a striking example of how innocuous data errors and alternative specifications lead to strikingly different results. Gautam and Anderson revisit the widely disseminated results of a study (Bindlish and Evenson 1993, 1997) of the impact of the training and visit (T&V) system of management for public extension services in Kenya. T&V was introduced in Kenya by the World Bank and has since been supported through two successive projects. The impact of the projects continues to be the subject of much debate. Gautam and Anderson's paper suggests the need for greater vigilance in empirical analysis, especially about the quality of data used to support Bank policy and the need to validate potentially influential findings. Using household data from 1990, Bindlish and Evenson found the returns from extension to be very high. But Gautam and Anderson find that the returns estimated by Bindlish and Evenson suffer from data errors, and limitations imposed by cross-sectional data. After correcting for several data processing and measurement errors, the authors show the results to be less robust than reported by Bindlish and Evenson and highly sensitive to regional effects. When region-specific effects are included, a positive return to extension cannot be established, using Bindlish and Evenson's data set and cross-sectional model specifications. After testing the robustness of results using a number of tests, Gautam and Anderson could not definitively establish the factors underlying strong regional effects, largely because of the limitations imposed by the cross-sectional framework. Household panel data methods would have allowed greater control for regional effects and would have yielded better insight into the impact of extension. The impact on agricultural productivity in Kenya expected from T&V extension services is not discernible from the available data, and the impact may vary across districts. The hypothesis that T&V had no impact in Kenya between 1982 and 1990 cannot be rejected. The sample data fail to support a positive rate of return on the investment in T&V. This paper-a product of the Sector and Thematic Evaluation Division, Operations Evaluation Department-is part of a larger exploration by the department of the effects of the investment in agricultural extension in Kenya. The authors may be contacted at email@example.com or firstname.lastname@example.org.
The rural economy in Bangladesh has powerfully advanced economic growth and substantially reduced poverty, especially since 2000, but the remarkable transformation and unprecedented dynamism in rural Bangladesh remain an underexplored, underappreciated, and largely untold story. Dynamics of Rural Growth in Bangladesh: Sustaining Poverty Reduction tells that story and inquires what specific actions Bangladesh might take—given the residual poverty and persistent malnutrition—to accelerate and channel its rural dynamism to sustain the gains in eliminating poverty, achieving shared prosperity, and advancing national aspirations to achieve middle-income status. The central element of this study, undertaken with the Government of Bangladesh Planning Commission to address key questions elicited through extensive consultation, is an empirical analysis that illuminates the underlying dynamics of rural growth, particularly the role of agriculture and its relationship to the nonfarm economy. Using all sources of data available for the macro-, meso-, and microhousehold levels, the analysis provides new evidence on changes in the rural economy and the principal drivers of rural incomes. It also examines market performance for high-value agricultural products and agriculture†“nutrition linkages, based on new surveys and analysis. The resulting evidence, examined in light of the rich knowledge of rural development in Bangladesh, is used to delineate the implications for policy and the strategic priorities for sustaining future rural development, poverty reduction, food security, and nutrition. The effects of policy reforms, changes in technology, and investments in infrastructure and human capital described here, along with the persistent enterprise of rural Bangladeshi households, offer a compelling case study of how mutually reinforcing actions can trigger the highly-sought-after virtuous cycle of rural development. The findings clearly demonstrate the pro-poor nature of agricultural growth and its catalytic role in stimulating the rural nonfarm economy. They show that households have no linear or predictable pathway out of poverty; instead, they wisely employ a combination of farm and nonfarm income strategies to climb out of, and then stay out of, poverty. The results represent a strong contribution to the global thinking on rural transformation and on how agriculture in particular sustains the economic momentum that fosters poverty reduction and more widespread prosperity.
This paper provides evidence from one of the poorest countries of the world that the property rights matter for efficiency, investment, and growth. With all land state-owned, the threat of land redistribution never appears far off the agenda. Land rental and leasing have been made legal, but transfer rights remain restricted and the perception of continuing tenure insecurity remains quite strong. Using a unique panel data set, this study investigates whether transfer rights and tenure insecurity affect household investment decisions, focusing on trees and shrubs. The panel data estimates suggest that limited perceived transfer rights, and the threat of expropriation, negatively affect long-term investment in Ethiopian agriculture, contributing to the low returns from land and perpetuating low growth and poverty.