Informal Institutions and the Effect on Economic Performance:
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Gitz-Johansen, Freja Høj1, Forfatter
Hansen, Henrik2, Vejleder
1Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7001              
2Økonomisk Institut, Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7014              
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Ukontrollerede emneord: Land Reforms, Institutions, Land Rights, Ethiopia
 Abstract: The land reforms in the two regions Amhara and Oromiya contained a registration and certificate process that served the purpose of establishing transparent and clearly defined user rights. In theory, it is expected that enhanced tenure security will increase the farmers’ marginal value of investment and increase the investment incentives. However, I argue that the behavioral response induced by the land reforms might vary across households according to local circumstances and result in heterogeneous productivity impacts.

Assuming that de facto land rights govern the behavior of the farmers rather than de jure land rights, the effect of a land reform, ceteris paribus, depends on the reform’s ability to change the farmers’ de facto land right. It is thus a necessary condition that the new property rights of land are ratified in the farmers’ de facto land rights for the laws to have an impact on the farmers’ behavior. The informal institutions of the society can potentially block the effect of a legal change on the farmers’ de facto land rights leaving the impact of the land reform neutral. Moreover, informal institutions can cause the impact of a legal change on the farmers’ de facto land rights to be diverse. Hence, the impact of a legal change, like a land reform, on the farmers’ investment incentives is likely to depend on the initial condition of the informal institutions before the reform and the mechanism used to enforce the rights.

To account for these factors and their potential influence on the farmers’ de facto land rights, I have in my analysis of the impact of the land reforms in Amhara and Oromiya on the farmers’ investment incentive, considered the legal knowledge of the farmers as a measure of perceived land rights, i.e. the farmer’s de facto rights. I assume that only if the farmers are aware of the legal rights, understand the legal rights, and are confident that they are able to enforce the rights, will the new legal rights be truly embedded in the farmers’ the facto land rights. Hence, lack of legal knowledge of the land reforms could reflect lack of understanding
of the rights, local interpretation of the law that leaves the farmer misguided or unaware, or maybe lack of trust in the rights. Consequently, lack of legal knowledge of the rights leaves me to believe, that the farmers’ de facto rights are likely to depend on the initial condition of the informal institutions before the reforms. Difference in the knowledge of the land rights among the farmers could thus potentially result in differences in the de facto land rights and as a result the land reforms will have heterogeneous impact on the investment behavior of the farmers.

In my analysis I use a difference-in-difference model to estimate the impact of the land reforms. At first I analyze the general impact of the land reforms on the farmers’ tenure security and investment behavior in both regions to see if the land reforms seem have managed to effectively affect the farmers tenure security. Second I analyze if there exist heterogeneity in the impact of the reforms on investment behavior based upon the farmers’ legal knowledge of the reforms.

Based upon data from the Ethiopian Rural Household Survey, I find that the land reforms in Amhara and Oromiya in general have managed to reduce the expropriation risk and enhance investment in soil conservations. However, the result of my analysis do not clearly indicate that knowledge of the new land rights have had a significant impact on the de facto land rights and hence, that knowledge of the land rights have lead to heterogeneous treatment effects.
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Bogmærk denne post:
 Type: Speciale
Alternativ titel: A case study of Ethiopia and the investment behavior among rural farmers
Alternativ titel: Uformelle Institutioner og Påvirkningen på Økonomiske Resultater:
Alternativ titel: Et casestudie af Etiopien og investeringsadfærden blandt landmænd
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Sprog: English - eng
 Datoer: 2014-04-24
 Sider: -
 Publiceringsinfo: København : Københavns Universitet
 Indholdsfortegnelse: Summary 1
1 Introduction 5
2 LiteratureReview 7
2.1 TheEmpiricalFindings 7
3 Ethiopia 10
3.1 ThePoliticalEconomyofEthiopia 10
3.1.1 TheImperialPeriod 10
3.1.2 TheDergRegime 11
3.1.3 TheTenureSystemToday 12
3.2 TheRegionalLandPolicy 13
4 TheTheoreticalBase 15
4.1 TheRelationshipBetweenPropertyRightsandInvestmentIncentives 15
4.2 PropertyRights 20
4.2.1 PropertyRightsofLand 20
4.2.2 InstitutionsanddefactoLandRights 21
5 MethodofAnalysis 24
5.1 ConceptualFramework 24
5.1.1 TheAnalysis 25
5.2 IdentificationStrategy 26
5.2.1 SimpleMeansDDComparison 26
5.2.2 RegressionEBasedDDAnalysis 27
5.2.3 HeterogeneousTreatmentEffects 28
5.2.4 TheAssumptionforanUnbiasedEstimator 29
5.3 EstimationMethod 31
5.3.1 TheLinearProbabilityModel 31
6 Data 33
6.1 TheEthiopianRuralHouseholdSurveys 33
6.2 KeyVariables 35
6.2.1 OutcomeVariables 35
6.2.2 MeasuresofdefactoRights 36
6.3 DataSelection 38
7 DescriptiveStatistics 40
7.1 FearofExpropriation,theLandCertificate,andLandRights 40
7.2 SoilConservation 44
7.3 TheGeneralSample 46
7.4 InformationConstraintsandKnowledgeofLandRights 49
7.4.1 InformationConstraints 49
7.4.2 KnowledgeoftheLandReforms 52
7.5 ControlVariables 55
8 EconometricResults 57
8.2 TheGeneralEffect 57
8.2.1 FearofExpropriation 57
8.2.2 InvestmentBehavior 60
8.3 HeterogeneousTreatmentEffects? 62
8.3.1 InformationConstraints 62
8.3.2 KnowledgeoftheRights 64
9 ConclusionandDiscussion 70
10 Bibliography 72
AppendixA 76
AppendixB 80
AppendixC 81
AppendixD 83
AppendixE 87
AppendixF 91
AppendixG 92
 Note: -
 Type: Speciale
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