Impacts of tenancy arrangements on investment and efficiency: evidence from Pakistan |
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Authors: | Akhter Ali Awudu Abdulai Renan Goetz |
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Institution: | 1. Social Sciences Research Institute, NARC, Islamabad, Pakistan;2. Department of Food Economics and Consumption Studies, University of Kiel, Olshausenstrasse 40, 24103 Kiel, Germany;3. Department of Economics, University of Girona, Campus Montilivi, s/n 17071 Girona, Spain |
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Abstract: | In this article, we use farm‐level data from the Punjab Province in Pakistan to analyze the impact of three tenancy contracts on investment in soil‐improving and productivity‐enhancing measures and farm productivity. A multivariate tobit model that accounts for potential substitutability and complementarity of investment options, as well as endogeneity of tenure arrangements was employed in the empirical analysis. Our empirical results indicate that land tenure arrangements influence farmers’ decisions to invest in soil‐improving and productivity‐enhancing measures. In particular, owner‐cultivators with secured tenancy arrangements were found to be more likely to invest in soil‐improving and productivity‐enhancing measures, compared to those on leased contracts. We also find that output per hectare was highest on land cultivated by owners and lowest on land under sharecropping tenancy, lending support to the Marshallian inefficiency hypothesis. |
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Keywords: | K11 Q15 Land tenure arrangements Marshallian Inefficiency Soil‐improving Investment |
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