Andrew Petcoff
Colton J.R. Noll
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Quick History
What is Land Reform?
Inequality
Benefits
Costs
Examples
Conclusion
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The Americas were discovered in 1492
Discovery of valuable minerals lead to
encomiendas
-Ecomienda is when large tracts of land
where granted to Conquistadors for
exchange of a portion of the output
Few people hold the majority of land
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Also known as Agrarian Reform is a process
which the government takes land and then
distributes the land to the land workers
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Provide small landowners access to land,
agricultural credit, housing, education,
warehouses, and technical assistance.
Three letter word affects the economy as a
whole…TAX.
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Def: The branch of economic theory concerned
with the social desirability of alternate
economic states.
Pareto Efficient: An allocation at which the
only way to make one person better off is to
make another person worse off.
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All the points on the contact curve are Pareto
efficient (A,B).
C is not efficient.
With A or B it is not possible to move the point
along the contact curve without making either
the small or large farmer worse off.
With C it is possible to increase the resources to
make one farmer better off without
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Welfare Theorem 1: A competitive economy
automatically allocates resources efficiently
without the need of help from the government.
Welfare Theorem 2: If society determines that
current distribution of resources is unfair, it
only needs to transfer resources in a way to be
deemed fair. Then let the market work and it
will be efficient.
Pareto efficient is not the same as socially
acceptable.
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Redistributes land from wealthy to poor
Leads to “political” stabilization
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Breaks political power of wealthy
Ex. Less than 10% of agricultural holds contain 77%
of the Brazil’s farmland
Ex. 1% of landholdings encompass 80% of
agricultural land in Paraguay
Threat of land reform makes inefficient farming by
latifundistas become more efficient.
Farmers have stronger incentive to work
harder.
-Can employ family members and avoid
having to hire seasonal labor at a low wage rate
with low human capital.
 Chance to own their own plot of land.
 Give illusion of equality.
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Higher tax rates.
Lives.
Redistribution of land costs. (i.e. Economies of
Scale.)
Does not help the poorest of the poor.
Does not work in democratic systems.
Cash cropping to subsistence farming.
Environmental costs.
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Land Reform was included in the 1917
Constitution
Nothing really happened until the 1930s
during the Cardenas administration
At this time almost half the farm land was
affected
Slowed down until the mid 70s
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Land was divided into what were called
“ejidos.”
Communal property rights on land from large
estates
 Land could be farmed collectively or by individuals
of the community
 Access passed through families but remained in the
community
 Each Ejidos was between 1 – 10 hectares of land
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 Made investments ineffective
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85% of the land given to peasant farmers from
1962-1982 was not suitable for crop producing.
The government pushed irrigation reforms (1946)
but only to large scale farmers because the
economies of scale farming.
Large Farms still produce 70% of Mexico’s
marketable foods
The small farmers depend on what they produce
for food. Some are able to sell crops for cash.
Land Reform policy considered a success (did not
hurt agriculture growth)
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Established by a militant government under
the leadership of Juan Alvarado.
Reform motivated by desire to: 1) calm rioters
and 2) break political power of latifundistas.
Government broke-up successful plantations in
coastal regions. CAPs., sharecropping &
renting were forbidden.
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ISI controls: discriminate against the
agricultural sector through exchange rate
policy, imposing price controls, subsidizing
food importers, all which reduced the
profitability of farmers.
Land Reform policy was a failure
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Land Reform is a Political tool
It needs more than land redistribution to be
successful
Amount of underused land is in short supply
Poorest of the poor are not better off
http://www.youtube.com/watch?v=saEU
l9F8VjY&feature=PlayList&p=B38919C698
989D9E&playnext_from=PL&playnext=1&
index=2
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Latin America’s Economy: Diversity, Trends,
and Conflicts. Eliana Cardoso and Ann
Helwege (1992).
http://en.wikipedia.org/wiki/Land_reform#L
atin_America
http://www.peruexplorer.com/land_reform.htm
http://www.cato.org/pub_display.php?pub_i
d=1016
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http://internationalbusiness.wikia.com/wiki/
Agrarian_Reform_In_Peru
http://en.wikipedia.org/wiki/Agrarian_land_
reform_in_Mexico
http://www.landreform.org/wp3.htm
Rosen, Harvey S., and Ted Gayer. Public
Finance. New York: McGraw-Hall/Irwin, 2008.