Land Reforms and Economic Growth in Developing Countries: A Case Study of Uganda

Abstract

Debate on the role of land reforms in the economic growth of developing countries has been on for a long time without firm consensus. However, the apparent failure of the ‘IMF-market-driven’ based economic reforms and policies to deliver quickly the much needed equitable economic growth seem to have accelerated demands for broadening of development strategies to include it. In this dissertation, the author attempts to analyze the impact of land reforms in the economic growth in developing countries. It is argued that land reforms that provide for efficient land administration and land registration system creates a framework for definition of property rights and land tenure security through issuance of land titles. It is further argued that this creates investment incentives; promotes efficiency; increases collateral value and other sector-wide externalities that promote economic growth. Using data from Uganda, the author tested the hypothesis that: “land reforms positively contribute to a country’s economic growth”. The evidence presented suggests a positive statistical significant relationship between land reforms and economic growth as approximated by: a) collateral value of a title and access to the credit market (Domestic credit to private sector); b) impact of land tenure security on investment and; c) FDI (control variable). However, the impact of urbanisation (a proxy for allocative efficiency) on economic growth was negative, contrary to the earlier expectation. This may not be considered a surprise result given the high levels of urban unemployment in Uganda. The general conclusion however is that for land reform to be effective, it should be accompanied by a wide range of other programmes such as development of appropriate rural infrastructure, reform of credit institutions, marketing facilities and new technologies as a comprehensive development policy.