As the global population surpasses 8 billion and concerns of crises driven by climate change and a resurgence of authoritarianism increase, it is more important now than ever to understand how property and land play a role in countries’ efforts to democratize. In January 2023, a report titled “Pathways to Prosperity: Land Reform Playbook” was developed by The Legatum Institute, a London-based think tank specializing in the drivers of and solutions to poverty around the world. The report explores the links between property rights, democracy, and prosperity. This is the second publication of the Prosperity Playbooks series, the first of which was the Democracy Playbook. The series shares cases and analyses of how people around the world have made their societies inclusive and prosperous.
Property rights over land are a significant determiner of prosperity everywhere but are especially important in low and middle-income countries with large rural populations which directly rely on agriculture and land use. Strong property rights contribute to market stability, investment, and citizens’ ability to participate in decision-making. Contrarily, weak property rights have negative impacts on workers’ and entrepreneurs’ economic success and agency over their lives. Considering these points, the report asserts that land reform influences a country’s ability to transition to and thrive as a liberal democracy. In a democracy, citizens can pressure the government to introduce fairer property rights and counterbalance the political influence of elites. There have been successful and unsuccessful attempts to introduce such reforms in different countries around the world, leading to the question this report seeks to answer: what are the characteristics of land reforms that contribute to sustained prosperity and democratization?
Land reform influences a country’s ability to transition to and thrive as a liberal democracy.
South Korea represents one example of successful land reform which contributed greatly to the country’s democratization. Following World War II, the government expropriated a sizable portion of land from non-working landowners to poor farmers and gave them full rights over the properties. While mass expropriation is a controversial course of action that is not a typical policy recommendation, post-conflict or post-revolutionary contexts provide a crucial opportunity in which many of these reforms can be highly effective. Having compensated the landowners for their losses and introduced fair ownership policies for farmers, Koreans could afford to spend money elsewhere. As a result, the country experienced dramatic increases in urbanization and higher education within a generation. Korea’s case also demonstrates that reforms must be wide-scale and comprehensive to tackle systemic inequalities, lest they fail to make substantial change, leading to dissatisfaction. The reforms must be drastic enough to enact change, but not too radical to undermine economic and political stability.
Furthermore, strong state capacity and funding from international financial sources is crucial to having the resources for large reforms. In Portugal, the tumultuous regime changes of the 1970s spurred waves of new laws to redistribute land, although policy changes sometimes came after rural workers took over estates by force. In the 1980s, Portugal fell under pressure by the International Monetary Fund and the European Economic Community to introduce more secure property rights and reduce government control in exchange for economic assistance. With support from these organizations, Portugal standardized its property policies and triggered nationwide development.
Reforms must be drastic enough to enact change, but not too radical to undermine economic and political stability.
Despite the need for government control over the reform implementation, success relies on the consensus of all parties involved. Backlash against reforms is not uncommon, but lack of social cohesion can put the program and the entire system in a dangerously unstable position. In the case of land reform, landowners must be compensated for their losses at a fair, non-confiscatory but below market value price, as was the case in Korea.
The most common flaw in failed reforms lies in what is missing from them. Simply reallocating physical property to workers and smaller landowners does not fully address the nuances of property rights and markets. Reforms must be complemented by effective legal and technical mechanisms, such as deeds and property registries. Additionally, the successful land reforms evaluated in this report came in a package of related development initiatives, including infrastructure and basic education. Therefore, property reforms must address not only physical property, but also the systems behind ownership and the effects of those reforms on other aspects of beneficiaries’ lives.
Land reforms — when thoughtfully designed — can be a crucial method to address deep societal inequalities and further both economic and democratic development
Comprehensive property rights as a complement to land reform not only encourage economic growth; they also protect the population from government overreach. Strong top-down control, while necessary for implementing changes, can backfire in terms of democratization. In Korea’s case, the government imposed land reforms but simultaneously gave more power to local farmers, thereby limiting its influence over individuals following the reforms. On the other hand, if a government gives land to citizens without strong property rights and well-functioning institutions such as courts, as was the case in Peru, landowners must rely on the state for agricultural loans and security of their properties, turning land reform into a method for politicians to control the rural population. As a result, Peru now faces corruption and clientelism.
In conclusion, land reforms — when thoughtfully designed — can be a crucial method to address deep societal inequalities and further both economic and democratic development. Successful reforms must be intended with the goal of increasing productivity and power for farmers and small landowners. By doing so, political participation, accountability, and representation increase. While land reforms alone are not enough to solve all of society’s problems, they play a key role in improving the lives of citizens and prospects for the country as a whole.
Published Date: February 27, 2023