The paradox of land reform, inequality and local development in Colombia

Over two centuries, Colombia transferred vast quantities of land, equivalent to the entire UK landmass, mainly to landless and poor peasants. And yet Colombia retains one of the highest concentrations of land ownership in the world. Why? We show that the effects of land reform on inequality and economic and human development were heterogeneous. On average, rural properties grew larger, land inequality and dispersion fell, and development increased across Colombia’s 1100+ municipalities between 1961-2010. But pre-existing inequality counteracts these effects, resulting in smaller rural properties, greater dispersion, and lower levels of development. How? Land reform increased public investment in agriculture, raising consumption of public and private goods. But land concentration again counters these effects. Elites seem to have distorted local decision-making to benefit themselves. We conclude that land reform’s second-order effects, on the distribution of local power, are more important than its first-order effects on the distribution of land.