Local Economy effects of Large-Scale Agricultural Investments

Paul Hofman, Esther Mokuwa et all

Development Economics Group, Wageningen University, The Netherlands Njala University, Sierra Leone

The last decade has seen a huge surge in land acquisitions by foreign companies. What are the impacts of such investments? To date there has been little rigorous quantitative evidence on the issue. We examine the economic impacts of a large-scale biofuel plantation in Sierra Leone.
We conduct a difference in difference analysis using three waves of a large n survey in both communities directly affected by the plantation and those outside the catchment area. We find a large average drop in income, mainly driven by lower income from agricultural activities. We
argue this is caused by a labour demand shock, reducing agricultural production. Spillover analysis suggests that the impacts are at least partially transmitted by a shock to the local economy. Households
that are employed at the plantation benefit: their incomes and assets increase. As a result, village-level inequality increases.

Event: Land Governance in an Interconnected World_Annual World Bank Conference on Land and Poverty_2018

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Document type:Local Economy effects of Large-Scale Agricultural Investments (2044 kB - pdf)