Journal Article

Land Tenure, Investment Incentives, and the Choice of Techniques: Evidence from Nicaragua

Oriana Bandiera

in The World Bank Economic Review

Volume 21, issue 3, pages 487-508
Published in print October 2007 | ISSN: 0258-6770
Published online May 2007 | e-ISSN: 1564-698X | DOI: http://dx.doi.org/10.1093/wber/lhm005
Land Tenure, Investment Incentives, and the Choice of Techniques: Evidence from Nicaragua

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  • Production and Organizations
  • Information, Knowledge, and Uncertainy
  • Economic Development
  • Agricultural Economics

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The choice of cultivation techniques is a key determinant of agricultural productivity and has important consequences for income growth and poverty reduction in developing countries. Household data from Nicaragua are used to show that the choice of cultivation technique depends on farmers' tenure status even when techniques are observable and contractible. In particular, tree crops are less likely to be grown on rented than on owner-cultivated plots. Further evidence indicates that the result follows from landlords' inability or unwillingness to commit to long-term tenancy contracts rather than from agency costs due to risk aversion or limited liability.

Keywords: D23; D82; O12; Q15

Journal Article.  8492 words.  Illustrated.

Subjects: Production and Organizations ; Information, Knowledge, and Uncertainy ; Economic Development ; Agricultural Economics

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