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Document Abstract
Published: 2011

What drives the global land rush?

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Recent increases in the level of agricultural commodity prices and the resulting demand for land has been accompanied by a rising interest in acquiring agricultural land by investors. This paper studies the determinants of foreign land acquisition for large-scale agriculture.

The paper estimates gravity models using data on bilateral investment relationships, together with newly constructed indicators of agro-ecological suitability in areas with low population density as well as land rights security. Consequently, the results confirm the central role of agro-ecological potential as a pull factor.

Nevertheless, the results suggest that, in contrast to what is found for foreign investment more generally, rule of law and good governance have no effect on the number of land-related investment. Moreover, and counterintuitively, the document finds that countries where governance of the land sector and tenure security are weak have been most attractive for investors.

Based on the findings, the author concludes that, to minimise the risk that such investments fail to produce benefits for local populations, the micro-level and project-based approach that has dominated the global debate so far will need to be complemented with an adequate policy. This policy will need to emphasis and determine actions to improve land governance, transparency and global monitoring.

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