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Specialization without regret - transfer rights, agricultural productivity, and investment in an industrializing economy

Author

Listed:
  • Carter, Michael R.
  • Yang Yao
Abstract
A number of studies have examined the effects of secure tenure on agricultural investment and productivity. The authors also study the importance of rights to household residual income and land use being transferable. Contemporary China - where industrialization has spread rapidly, if unevenly - is a good place to study the economic effects of transfer rights as well as conventional security of tenure. Village collectives formally own land in China, so there can be no individual land sales, but farmers are sometimes entitled to sell their rights to use the land allocated to them under the household responsibility system. Whether a household has secure tenure depends on whether its landholding will be reduced if the household population declines, whether the landholding will be increased if the household population increases, and how frequent average land adjustments are under the household responsibility system. Analyzing panel data for a sample of farm households, the authors study the"investment regret mitigation effect", which results when greater transfer rights make households more willing to invest because they are less likely to regret such investments when they can recoup the investment value even if they exit farming. The authors find that transfer rights may be especially important in an industrializing economy. A property rights system with incomplete security of tenure but with strong transfer rights that permit"specialization without regret"- so farmers can recoup the value of an investment even if they exit farming - may have much to recommend it.

Suggested Citation

  • Carter, Michael R. & Yang Yao, 1999. "Specialization without regret - transfer rights, agricultural productivity, and investment in an industrializing economy," Policy Research Working Paper Series 2202, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2202
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    References listed on IDEAS

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    Cited by:

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    2. Bennett, Michael T. & Mehta, Aashish & Xu, Jintao, 2011. "Incomplete property rights, exposure to markets and the provision of environmental services in China," China Economic Review, Elsevier, vol. 22(4), pages 485-498.
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    4. Heyuan You & Shenyan Wu & Xin Wu & Xuxu Guo & Yan Song, 2021. "The underlying influencing factors of farmland transfer in urbanizing China: implications for sustainable land use goals," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(6), pages 8722-8745, June.
    5. Deininger, Klaus & Jin, Songqing, 2006. "Tenure security and land-related investment: Evidence from Ethiopia," European Economic Review, Elsevier, vol. 50(5), pages 1245-1277, July.
    6. Nakasone, Eduardo, 2011. "The impact of land titling on labor allocation: Evidence from rural Peru," IFPRI discussion papers 1111, International Food Policy Research Institute (IFPRI).
    7. Shaikh M. S. U. Eskander & Edward B. Barbier, 2023. "Adaptation to Natural Disasters through the Agricultural Land Rental Market: Evidence from Bangladesh," Land Economics, University of Wisconsin Press, vol. 99(1), pages 141-160.
    8. Mullan, Katrina & Grosjean, Pauline & Kontoleon, Andreas, 2011. "Land Tenure Arrangements and Rural-Urban Migration in China," World Development, Elsevier, vol. 39(1), pages 123-133, January.
    9. Hongqin Chang & Ping Ai & Yuan Li, 2018. "Land tenure policy and off-farm employment in rural China," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-28, December.
    10. Deininger, Klaus & Jin, Songqing, 2003. "The Impact of Property Rights on Households' Investment, Risk Coping, and Policy Preferences: Evidence from China," Economic Development and Cultural Change, University of Chicago Press, vol. 51(4), pages 851-882, July.
    11. Klaus Deininger & Songqing Jin, 2008. "Land Sales and Rental Markets in Transition: Evidence from Rural Vietnam," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 67-101, February.
    12. Xu, Yuting & Huang, Xianjin & Bao, Helen X.H. & Ju, Xiang & Zhong, Taiyang & Chen, Zhigang & Zhou, Yan, 2018. "Rural land rights reform and agro-environmental sustainability: Empirical evidence from China," Land Use Policy, Elsevier, vol. 74(C), pages 73-87.
    13. Chuanhao Tian & Yan Song & Christine E. Boyle, 2012. "Impacts of China's burgeoning rural land rental markets on equity: A case study of developed areas along the eastern coast," Regional Science Policy & Practice, Wiley Blackwell, vol. 4(3), pages 301-315, August.
    14. Hong, Weijie & Luo, Biliang & Hu, Xinyan, 2020. "Land titling, land reallocation experience, and investment incentives: Evidence from rural China," Land Use Policy, Elsevier, vol. 90(C).
    15. Hongqin Chang & Jing Liu & Yanyun Gao, 2017. "Land tenure policy and women’s off-farm employment in rural China," Working Papers PMMA 2017-03, PEP-PMMA.
    16. Hoken, Hisatoshi, 2016. "Participation in farmer's cooperatives and its effects on agricultural incomes : evidence from vegetable-producing areas in China," IDE Discussion Papers 578, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    17. Grosjean, Pauline & Kontoleon, Andreas, 2009. "How Sustainable are Sustainable Development Programs? The Case of the Sloping Land Conversion Program in China," World Development, Elsevier, vol. 37(1), pages 268-285, January.
    18. Qiu, Tongwei & Boris Choy, S.T. & Li, Shangpu & He, Qinying & Luo, Biliang, 2020. "Does land renting-in reduce grain production? Evidence from rural China," Land Use Policy, Elsevier, vol. 90(C).
    19. Tu, Qin & Heerink, Nico & Xing, Li, 2006. "Factors Affecting the Development of Land Rental Markets in China - A Case Study for Puding County, Guizhou Province," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25547, International Association of Agricultural Economists.
    20. Pauline Grosjean & Andreas Kontoleon & Shiqiu Zhang, 2010. "Assessing the Sustainability of the Sloping Land Conversion Programme: A Choice Experiment Approach," Chapters, in: Jeff Bennett & Ekin Birol (ed.), Choice Experiments in Developing Countries, chapter 7, Edward Elgar Publishing.
    21. Yuan Wei & Xu Guanjun & Li Yingzi & Jin Jingjing, 2016. "Empirical Studies on the Relationship between Households¡¯Trust in Government and Agricultural Land Tenancy-Based on the Households Survey in Four Provinces," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 33-39, March.

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