Large-scale land acquisitions: Trees, trade and structural change

Tommaso Sonno and Davide Zufacchi

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Large-scale land acquisitions are a key component of agricultural foreign direct investment. In 2023 alone, nearly 6% of the world's arable land was acquired globally. This paper examines their impact on agricultural production, environmental outcomes, and local communities. To identify these effects, we exploit an exogenous increase in palm oil land acquisitions driven by the Ebola epidemic in Liberia. We find a 54% growth in production, primarily due to an expansion in cultivated hectares rather than large improvements in land productivity, accompanied by a significant rise in palm oil exports. Our results indicate that LSLAs have altered the equilibrium of palm oil production, fuelling the adoption of an extensive monoculture system oriented toward international markets. The expansion of this tradable industry generated modest positive effects on the local economy and spurred a process of structural transformation. Women transitioned from agriculture to service and sales jobs, while men shifted into manual labour positions. However, all of this came at a cost: increased deforestation, air pollution, and a decline in local land ownership.

Keywords: large-scale land acquisitions; agricultural production; structural transformation (search for similar items in EconPapers)
Date: 2025-02-17
New Economics Papers: this item is included in nep-agr, nep-dev, nep-int and nep-inv
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