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Land Institutions, Productivity and Politics

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Land Institutions, Productivity and Politics Traditional Elites: Agricultural Productivity and the Persistence of Political Power Sabrin Beg University of Delaware Annual Bank Conference on Development Economics, June 2016 Motivation I Historic institutions matter for present economic outcomes I One potential channel is through the identity and incentives of historic elites I Influence policy and ultimately growth I Elites are historically known to provide patronage to rural masses, capture the state I Breaking down the paternalistic ties between elites and their clients led way for the formation of welfare states I Empirical work is challenging I How do elites acquire power and affect public goods? I What factors reinforce or undermine the power of existing political elites? 2 / 41 This Paper: Research Question I Understand the relationship of historic land distribution with the distribution of political power, and how landowning elites affect electoral outcomes and public goods in context of Pakistan I Specifically, I ask three questions: 1. How do traditional landowning elites maintain political dominance? 2. How do they effect political competition and allocation of public goods? 3. How does the relationship between land and power change with development, vis. a permanent shift in agricultural technology and productivity? 3 / 41 Model I Model land and electoral market to show how landowners can acquire political support I Derive testable predictions for tenure, electoral and public goods outcomes; what happens with technological change Empirics I Exploit introduction of an election to test how landowning-politicians influence tenants I Exploit historic institutions and exogenous technological change to test the effect of a productivity shift on ag. tenure, electoral and public goods outcomes This Paper: What I do Pakistan good example: unequal land ownership, landowning elites legacy of colonial times; able to retain political power and influence policy 4 / 41 Empirics I Exploit introduction of an election to test how landowning-politicians influence tenants I Exploit historic institutions and exogenous technological change to test the effect of a productivity shift on ag. tenure, electoral and public goods outcomes This Paper: What I do Pakistan good example: unequal land ownership, landowning elites legacy of colonial times; able to retain political power and influence policy Model I Model land and electoral market to show how landowners can acquire political support I Derive testable predictions for tenure, electoral and public goods outcomes; what happens with technological change 4 / 41 This Paper: What I do Pakistan good example: unequal land ownership, landowning elites legacy of colonial times; able to retain political power and influence policy Model I Model land and electoral market to show how landowners can acquire political support I Derive testable predictions for tenure, electoral and public goods outcomes; what happens with technological change Empirics I Exploit introduction of an election to test how landowning-politicians influence tenants I Exploit historic institutions and exogenous technological change to test the effect of a productivity shift on ag. tenure, electoral and public goods outcomes 4 / 41 Related Literature Institutional persistence and Elite Capture: I Historic land tenures (Banerjee & Iyer 2001); property rights (Field 2005, 2007), colonial systems (Dell 2010) I Traditional elites (Acemoglu, Reed and Robinson 2014) Political Clientelism: I Clientelism (Keefer & Valaicu 2008, Dixit & Londregan 1996) I Inefficiency of democracy in developing world (Persson & Tabellini 2000) Old political economy literature: Clientelist politics and reciprocity between traditional rural patrons and peasants (Powell 1970, Scott & Kerkvliet 1976, Alston & Ferrie 1999); Baland & Robinson (2008) I Interlinked agrarian markets (Braverman & Srinivasan 1981, Braverman & Stiglitz 1982, Bell & Srinivasan 1989) 5 / 41 Road Map 1. Background 2. Model 3. Data 4. Empirical Strategy and Results 5. Discussion and Conclusion Road Map Background Model Data Empirical Strategy and Results Discussion and Conclusion 6 / 41 I Within villages or clusters of villages, have monopsonist status I Typically ≤3 large landowners per village (median village has one) controlling majority of village land I 75% are small-holder (own ≤5 ac.) or landless I Tenants with same landlord for their entire farming career or over generations Historic Landowning Elites I Colonial institutions granted large estates to local landlords in some districts; led to the creation of a landowning class 7 / 41 I Typically ≤3 large landowners per village (median village has one) controlling majority of village land I 75% are small-holder (own ≤5 ac.) or landless I Tenants with same landlord for their entire farming career or over generations Historic Landowning Elites I Colonial institutions granted large estates to local landlords in some districts; led to the creation of a landowning class I Within villages or clusters of villages, have monopsonist status 7 / 41 Historic Landowning Elites I Colonial institutions granted large estates to local landlords in some districts; led to the creation of a landowning class I Within villages or clusters of villages, have monopsonist status I Typically ≤3 large landowners per village (median village has one) controlling majority of village land I 75% are small-holder (own ≤5 ac.) or landless I Tenants with same landlord for their entire farming career or over generations 7 / 41 Landowning Elites at Present Economic Dominance I An \oligarchy" of land owners interact with a large population of landless and small-holder households I Sharecropping tenancy is high Political Dominance I 70% of members of Provincial Assembly are landowners (several owning over 1000's of acres) 8 / 41 Landowning Elites and Politics Mumtaz Ali Bhutto interview in TIME (2008) Own 40,000 acres ... cultivated by thousands of sharecroppers dependent on [them] ... the Bhutto family can count on a large turnout of supporters at the polls, [in exchange] for a place to live, seeds and fertilizer. And patronage. 'If my tenants are happy with me, they work more efficiently on the lands. You help the people and they will help you.' 9 / 41 Landowning Elites - Common Interests, but Dwindling Influence I Historically, the landowning families act in coordination to achieve common interests '... they would decide between themselves, taking turns at being elected' - villager (BBC 2008) I More recently, politics is being re-shaped: 'vacuums formed as labour-intensive plantations decline, cotton farming modernises and old families lose clout' (Economist 2013) 10 / 41 Landowning Elites Source: Bloomberg.com Results Overview 11 / 41 Road Map Background Model Data Empirical Strategy and Results Discussion and Conclusion 12 / 41 Testable Predictions Proposition Landlord politicians, who have incentive to offer private transfers, are more likely to: (a) Offer more sharecropping contracts (b) Offer contracts more favorable to tenants (by paying higher cost share for inputs) 13 / 41 Testable Predictions Proposition A productivity shift causes (a) SC tenancy to fall and profits to rise The fall in tenancy: b) Reduces landlord's vote share and winning probability; improves electoral competition c) Landlord \preferred" public goods lower relative to other public goods. and vice versa for the income effect 14 / 41 Road Map Background Model Data Empirical Strategy and Results Discussion and Conclusion 15 / 41 Data I Pakistan Rural Household Survey (2000, 2003) I Election Commission (2002-2003) I FAO Global Agro-Ecological Zones Data I Decennial Agricultural Census (1960-2010), Annual Agricultural Statistics I Quintennial Village Census (1993-2008) I Pakistan Living Standards Measurement Surveys (2002-2006) I Land settlement reports, district and province gazetteers from 1857-early1900s 16 / 41 Road Map Background Model Data Empirical Strategy and Results Discussion and Conclusion 17 / 41 Testing Proposition 1 Landlords who have incentive to offer political transfers prefer sharecropping contracts, and offer contracts more favorable to tenants (by paying higher cost share) I Empirical Strategy: compare LL politicians with electoral incentives to LL without electoral incentives using the introduction of election after a non-democratic regime I Pakistan Rural Household Survey panel data I 2000-01 during a military government; 2003-04 after the 2002 national elections 18 / 41 Testing Proposition 1 - Estimating Equation yi;j;p;t = γ1LL winningpoliticiani;j;p + γ2PostElectiont + γ3ηp + γ4σj + γ5&i;j + κi + "i;j;p;t; 19 / 41 Landlord Politician and Sharecropping Dependent variables is dummy indicating plot is sharecropped (1) (2) (3) (4) (5) (6) (7) (8) LL is Politician PostElection 0.174** 0.169** 0.182** 14.70*** 0.169** 0.171** 0.166** 32.25*** (0.0726) (0.0741) (0.0827) (1.178) (0.0728) (0.0740) (0.0759) (4.785) PostElection -0.0546*** -0.0546** -0.0598** -1.982*** -0.0496** -0.0485** -0.0384 0.836 (0.0202) (0.0222) (0.0244) (0.560) (0.0195) (0.0221) (0.0391) (1.672) Observations 1034 1034 1034 1034 846 846 846 846 Plot Type Leasedin/out Leasedin/out Leasedin/out Leasedin/out Leasedin Leasedin Leasedin Leasedin Plot Level Controls No Yes Yes Yes No Yes Yes Yes LL/Tenant Level Controls No No Yes Yes No Yes Yes Yes Crop Composition No No No No No No Yes Yes Notes: Regressions are at plot level with household fixed effect. Robust standard errors clustered at household level. Plot level controls include plot soil, slope and area. Addiotional controls
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