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A Profit Function Approach to the Efficiency Aspects of Land Reform in Zimbabwe

Author

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  • Khatri, Y.
  • Jayne, T.S.
  • Thirtle, C.

Abstract

The purchase of commercial farm land in Zimbabwe for resettlement has been a factor in government policy since independence in 1980, but from l 980 to 1989 only 52 000 families were relocated. The Land Acquisition Bill of 1992 made compulsory purchase easier and at present the government has announced its intention to considerably increase the rate of resettlement. But Zimbabwe has a serious food security problem and the output effects of land redistribution are a matter of dispute. The World Bank estimate that 3 million hectares of commercial farmland are under-utilized is contested by the Commercial Farmer's Union. Fitting a normalized restricted profit function to the data for the commercial sector allows estimation of the shadow price of commercial farm land. We find that the model suggests that the World Bank is correct, in that the marginal value product of land is negative, meaning that there is under-utilization. However, negative values of capital assets are common when real interest rates are negative, so the result should be treated with some caution. Also, the problem of identifying the unutilized land is not trivial and redistributing intra-marginal land would have output effects.

Suggested Citation

  • Khatri, Y. & Jayne, T.S. & Thirtle, C., 1997. "A Profit Function Approach to the Efficiency Aspects of Land Reform in Zimbabwe," 1997 Occasional Paper Series No. 7 198048, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaaeo7:198048
    DOI: 10.22004/ag.econ.198048
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    References listed on IDEAS

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    1. Lau, Lawrence J, 1972. "Profit Functions of Technologies with Multiple Inputs and Outputs," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 281-289, August.
    2. Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
    3. Catherine J. Morrison, 1985. "On the Economic Interpretation and Measurement of Optimal Capacity Utilization with Anticipatory Expectations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 295-309.
    4. Berndt, Ernst R. & Fuss, Melvyn A., 1986. "Productivity measurement with adjustments for variations in capacity utilization and other forms of temporary equilibrium," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 7-29.
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    1. Schimmelpfennig, David & Thirtle, Colin & van Zyl, Johan & Arnade, Carlos & Khatri, Yougesh, 2000. "Short and long-run returns to agricultural R&D in South Africa, or will the real rate of return please stand up?," Agricultural Economics, Blackwell, vol. 23(1), pages 1-15, June.

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