Land Titles, Tenure Security and Agricultural Credit: A Review of Principles, Evidence and Hypotheses

Abstract

"It is common to view security of tenure and, more specifically, the existence of alienable land titles as preconditions for agricultural credit and efficient levels of investment in agricultural production. In this paper, we review the principles and hypotheses, and evidence on these themes and suggest a perspective for organizing future research. In what might be called the 'moral economy' or neo-Marxian perspective, modern capitalistic institutions such as legally enforceable land titles are thought to undermine the harmony of the indigenous social order, replace 'shared poverty' with mechanisms for exploitation, and create class conflict (see Scott, 1976; Geertz, 1963; and the assessments of Popkin, 1978 and Roumasset and Smith, 1981) . At the other extreme, what might be called the 'new orthodoxy,' is the view that economic development requires the creation of an institutional infrastructure to facilitate-efficient resource allocation by competitive markets. In what follows, we also explore the view that the mix of traditional, market and government institutions evolves in response to relative factor endowments and technology. While it is therefore possible that creation of legally enforceable land rights may lower the supply price of credit, it is also possible that replacement of indigenous institutions by artificial ones may be premature and not have the desired effect. While land titles may facilitate the enforcement of lending contracts, they are not the only enforcement device."