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Land Reform Linking Research to Better Outcomes Mwangi wa G th nji University of Massachusetts-Amherst The Changing Global Landscape in Rural Development International Conference University of Pretoria Post Graduate School of Agriculture and Rural Development Farm Inn, November 25, 2010

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Why Land Reform? Land Tenure Systems Land Redistribution Political Question Land to the Tiller Development Question Equity and Growth

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Understanding African Economies, Structural Transformation and the Need for Redistributive Land Reform Formal Sector Export Enclave Economies Colonial inheritance Mining Commercial Agriculture Services and Public Adminstration Higher Productivity Higher incomes Relatively Capital Intense Reserve Labour Sectors Small / Subsistence Agriculture Informal Sector Low Productivity Low income Improvements in Health /Nutrition resulting in increased population growth rates Failure of Formal Sector to absorb new entrants leads to increased supply of labour in small holder agriculture and informal sector. Depresses labour incomes there and holds down formal wage incomes. Growth translates into higher profits.

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A Typical African Economy Assume Country has labour force of 10 Million 70% in agriculture 20% in informal 10% in formal Assume growth with zero productivity growth 2% increase in Labour force No unemployment

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Impact of 6% growth with no Labour Productivity increases

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Impact of 6% growth with 0.55* Employment elasticity of Growth Average of South Africa and Kenya Roughly 30% marginal productivity change

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Implications of Low Employment Creation Growth Alone in the African context will not lead in the short to medium term to decreases in the reserve pool of labour Reserve labour will suppress labour incomes increasing income inequality (wage vs profit share) further increases in inequality Policy must attack reserve labour at its source plus improve employment creation. Land Redistribution and Agricultural Transformation Industrialization Virtuous Cycle of Demand Driven Development Policy must attack reserve labour at its source plus improve employment creation. Land Redistribution and Agricultural Transformation Industrialization Virtuous Cycle of Demand Driven Development

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Land Reform Historical Conditions of Success Clarity of Aim Creating New Small Holder Commercial Farmers Literacy Business Training Extension /Mentoring Youth and Women Success of mentors because they are multidiscplinary Reasonable Cost to New Farmers / Requires Some Confistication Rural Infrastructure Labour Intensive Owned by rural population / wealth creation Price Incentives to shift Production Research sensitive to whom new farmers are products they produce On farm trials Understanding Of Global Conditions Competitors /Trends and Markets WTO Institutional Innovation

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Institutional Innovation- The KTDA Story Learning from our successes KTDA began as single development organization designed to reap returns to scale for small scale farmer and specifically designed to develop tea industry. Made Kenya top exporter of black tea based on small holder production Political Commitment of government Why? Rural Middle class Relatively equal regional distribution compared to other crops Flexibility of Institution From Single Tea Development Authority to Farmer Owned Private Company that manages all Smallholder tea factories Tea Research Institute and Tea Board (regulatory authority) Returns to Scale and Lower Costs fall in unit costs of production kshs. 4000 in 1965 to 226 in 1988 in 1975 prices Low fertilizer prices 15% below Learning across factories/ Continous Learning /Extension /Expanding Tea Production Central purchase allows for easier credit provision

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Connecting Research and Better Outcomes Defining the Debate Structural Transformation not just rural development Defining a National and Regional Research Program A New Approach to Funding Needs Assessment Research Constituencies Government Rural Households Agricultural Industry Collaborative National Research Program Field Research

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Issues with Second Stream of Funding Applied Research that is Policy Driven receives same credit as journal driven research Restructure Faculty time to value Applied Research New Questions Institutional Innovation Human Capital for Trade/ Flexibility Appropriate Technological Innovation World Trade Organization Trade and Law Reassessing Microfinance