Property Rights in Land: What are the Key Attributes?
March 3, 2003
Denise Hare, Associate Professor of Economics
Jalal Akbar Mumtaz, Economics major, May 2004 expected graduation
Abstract: China and Vietnam, as do many countries in the midst of market-directed transitions, face critical questions with regard to their existing and future land tenure arrangements. Policy actions (including a decision to take no action) at this stage will have substantial impact on growth potential and its social consequences. Our proposed research has three components. The first is a re-examination of the concept of property rights, and consideration of how they may be constructed in the case under examination—that is, as applied to agricultural land in a poor country where the set of supporting institutions may be rather thin. The second part of the research is an empirical investigation of regional differences in demand for secure use rights, as evidenced in farm household data from Vietnam, collected in 1996/97, several years after the 1993 land law was put into effect. The final component of the research is to reconsider our findings from the first two stages in order to determine whether consistent inferences can be drawn between the importance or relevance of the transferability of property rights and circumstances under which such systems (with the right to transfer) are likely to evolve. In this final stage, the case of China will be reconsidered as well, as the results of this research may shed light on certain puzzles concerning existing land arrangements. In addition, they may serve to inform the on-going policy discussion regarding the future of both Vietnam's and China's land management systems.
Property Rights in Land: What are the Key Attributes?
Denise Hare
Jalal Akbar Mumtaz
Vietnam implemented a series of agricultural reforms starting from the early 1980s that are similar in many ways to those carried out in China, beginning only a few years earlier. Both countries experienced dramatic productivity increases following moves to decollectivize agriculture and to restore production responsibilities to farm households. Corresponding improvements in rural living standards lent public support for continued economic reforms in both countries. However, subsequent reform paths have displayed some notable divergence. For example, in China, land ownership resides with the collective, which in turn allocates land to farmers for cultivation purposes. Land use rights are largely determined at the village level, and vary from place to place. In Vietnam, on the other hand, national legislation adopted in 1993 spells out the rights of farmers with respect to the land that they cultivate. While all land belongs to the state, agricultural land is allocated to farmers for long-term use (20 years). In addition, with possession of legal title (the land use rights certificate), farmers are permitted to exchange, transfer, lease, inherit, and mortgage their land use rights.
The evolution of a land market in Vietnam has been applauded in some circles as an important step in Vietnam's rural economic development (World Bank, 1999). Others, however, have expressed reservations and concerns that trade in use rights may lead to increased differentiation in opportunities and outcomes between the poor and the well off, and it has been reported that landlessness among the rural poor is increasing (Oxfam Great Britain, 1999). The debate about how to proceed with land policy in China also has touched on many of the same themes, with concern being expressed that the current system leads to inefficient use of land resources, but that moves towards privatization may entail substantial social costs (Brandt, et al., 2002).
Despite potential benefits to farmers, issuance of the land use rights certificates has proceeded at an extremely slow pace in Vietnam, and is still not fully complete ten years following the adoption of the legislation. Among the factors to which the delays have been attributed include confusion about issuance procedures, delays in preparation of the cadastral maps, boundary conflicts among land users, and inertia of the local officials charged with carrying out the procedures. Regional differences in completion rates also have been observed. The volume of market activity for sale, lease, or mortgage of use rights is low in most parts of rural Vietnam, and in many cases, transactions are arranged informally between relatives or close friends without formal registration. Farmers in rural Vietnam generally express support for the long-term use rights to land and for the documentation provided through land use right certification. However, previous research (Hare, 2001) indicates that the relative attractiveness of the benefits associated with the land use certificates may vary from place to place. In a similar vein, the literature on China has provided evidence of systematic heterogeneity in the desire for secure use rights in land (Kung, 2001; Yao, 1999; Liu, Carter, and Yao, 1998) and in the desire to engage in land market transactions (Yao, 2000).
Our proposed research has three components. The first is a re-examination of the concept of property rights, and consideration of how they may be constructed in the case under examination—that is, as applied to agricultural land in a poor country where the set of supporting institutions may be rather thin. Though the right of transfer has received substantial attention among economists, in particular, we will include other attributes of property rights in our analysis and consider circumstances under which they may or may not dominate transferability in terms of attractiveness to the holder of those rights. This exercise will draw on a broad-based literature spanning economic, legal, and other social scientific treatments of the evolution and theories of property rights.
The second part of the research is an empirical investigation of regional differences in demand for secure use rights, as evidenced in farm household data from Vietnam, collected in 1996/97, several years after the 1993 land law was put into effect. On-going research conducted by Hare suggests that there are systematic differences in the way that households view the land use rights certificates to which they are legally entitled, and the way that possession of the certificate influences key economic decisions at the household level. Among the most striking preliminary differences identified in the data are those between the Red River delta and the Mekong River delta regions. Additional data analysis will be conducted to confirm and extend our understanding of these results. We will also explore factors that may help to explain this systematic variation across regions. One of our main tasks this summer is to trace patterns of land tenure arrangements in these two regions prior to the implementation of collectivization which may shed some light on some of the current differences between regions that we observe.
The final component of the research is to reconsider our findings from the first two stages in order to determine whether consistent inferences can be drawn between the importance or relevance of the transferability of property rights and circumstances under which such systems (with the right to transfer) are likely to evolve. Possession of the formal government-issued certificate may be an important tool in facilitating the right of transfer. However, the question we raise in the first stage of the research is whether transferability is the most important component of the bundle of property rights in the setting under consideration (rural Vietnam, and possibly by extension, rural China). On the contrary, perhaps key rights evolve and are recognized (albeit informally) at a local level, rendering the possession of legal title less critical. This last stage of the research will also include a broader reading of the literature on the outcomes of land titling schemes in other countries. There have been quite a number of these reforms undertaken in recent years, particularly in countries undergoing market transitions. Therefore the literature is relatively abundant. In this final stage, the case of China will be reconsidered as well, as the results of this research may shed light on why land rights may vary so drastically from place to place, particularly in a country as large and diverse as China. In addition, they may serve to inform the on-going policy discussion regarding the future of both China's and Vietnam's land management systems.
Selected Bibliography
Brandt, Loren, Jikun Huang, Guo Li, and Scott Rozelle, "Land Rights in Rural China: Facts,
Fictions and Issues," The China Journal, 47:67-97. January 2002.
de Janvry, Alain, Gustavo Gordillo, Jean-Philippe Platteau, and Elisabeth Sadoulet, Access to
Land, Rural Poverty, and Public Action, New York: Oxford University Press, 2001.
Demsetz, Harold, "Toward a Theory of Property Rights," The American Economic Review, 57,
2: 347-359, May 1967.
Ellickson, Robert C., "Property in Land," 102 Yale Law Journal 1315, April 1993.
Hare, Denise, "Implementation of a System of Transferable Land Use Rights Ownership in Rural
Vietnam, with Implications for China's Agricultural Land Management Policy,"
unpublished manuscript, May 2001.
Kung, James Kai-sing, Choice of Land Tenure in China: The Case of a County with Quasi-
Private Property Rights. Hong Kong University of Science and Technology, 2001.
Liu, Shouying, Carter, Michael R., and Yao, Yang, “Dimensions and Diversity of Property
Rights in Rural China: Dilemmas on the Road to Further Reform.” World Development,
26, 10:1789-1806, October 1998.
Oxfam Great Britain, Landlessness in the Mekong Delta: An Analysis of the Situation in Duyen
Hai. Hanoi, 1999a.
Prosterman, Roy L. and Jeffrey M. Riedinger, Land Reform and Democratic Development,
Baltimore: Th
Property Rights in Land: What are the Key Attributes?March 3, 2003Denise Hare, Associate Professor of EconomicsJalal Akbar Mumtaz, Economics major, May 2004 expected graduationบทคัดย่อ: ประเทศจีนและเวียดนาม ทำประเทศกลางช่วงตลาดโดยตรง เผชิญคำถามสำคัญเกี่ยวกับการที่มีอยู่ และในอนาคตที่ดินอายุงานจัด นโยบายการดำเนินการ (รวมถึงการตัดสินใจไม่ดำเนินการ) ในขั้นตอนนี้จะมีกระทบเติบโตศักยภาพและผลกระทบของสังคม วิจัยนำเสนอของเรามีส่วนประกอบ 3 ครั้งแรกเป็นการสอบแนวคิดของสิทธิ และพิจารณาว่าพวกเขาอาจสร้างในกรณีภายใต้ตรวจสอบ — นั่นคือ เป็นที่ดินใช้เพื่อการเกษตรในประเทศยากจนที่ตั้งสนับสนุนสถาบันอาจจะค่อนข้างบางด้วย ส่วนสองของการวิจัยคือ การสอบสวนผลของความแตกต่างภูมิภาคในความต้องการสิทธิการใช้ทาง เห็นในฟาร์มข้อมูลครัวเรือนจากเวียดนาม รวบรวมในปี 1996/97 หลายปีหลังจากปี 1993 ที่ย้ายผลกฎหมายที่ดิน ส่วนประกอบสุดท้ายของการวิจัยจะ reconsider เราพบจากขั้นสองเพื่อกำหนดว่า สามารถดึง inferences สอดคล้องกันระหว่างความสำคัญหรือเกี่ยวข้อง transferability สิทธิและสถานการณ์มีแนวโน้มที่พัฒนาภายใต้ระบบ (มีสิทธิที่จะโอนย้าย) ในขั้นตอนสุดท้าย กรณีของจีนจะสามารถทบทวนด้วย ตามผลการวิจัยนี้อาจหลั่งน้ำตาแสงในปริศนาบางอย่างเกี่ยวกับการจัดการที่ดินที่มีอยู่ นอกจากนี้ พวกเขาอาจเป็นการแจ้งในนโยบายสนทนาเกี่ยวกับอนาคตของระบบบริหารแผ่นดินของเวียดนามและจีน Property Rights in Land: What are the Key Attributes?Denise HareJalal Akbar MumtazVietnam implemented a series of agricultural reforms starting from the early 1980s that are similar in many ways to those carried out in China, beginning only a few years earlier. Both countries experienced dramatic productivity increases following moves to decollectivize agriculture and to restore production responsibilities to farm households. Corresponding improvements in rural living standards lent public support for continued economic reforms in both countries. However, subsequent reform paths have displayed some notable divergence. For example, in China, land ownership resides with the collective, which in turn allocates land to farmers for cultivation purposes. Land use rights are largely determined at the village level, and vary from place to place. In Vietnam, on the other hand, national legislation adopted in 1993 spells out the rights of farmers with respect to the land that they cultivate. While all land belongs to the state, agricultural land is allocated to farmers for long-term use (20 years). In addition, with possession of legal title (the land use rights certificate), farmers are permitted to exchange, transfer, lease, inherit, and mortgage their land use rights.The evolution of a land market in Vietnam has been applauded in some circles as an important step in Vietnam's rural economic development (World Bank, 1999). Others, however, have expressed reservations and concerns that trade in use rights may lead to increased differentiation in opportunities and outcomes between the poor and the well off, and it has been reported that landlessness among the rural poor is increasing (Oxfam Great Britain, 1999). The debate about how to proceed with land policy in China also has touched on many of the same themes, with concern being expressed that the current system leads to inefficient use of land resources, but that moves towards privatization may entail substantial social costs (Brandt, et al., 2002).Despite potential benefits to farmers, issuance of the land use rights certificates has proceeded at an extremely slow pace in Vietnam, and is still not fully complete ten years following the adoption of the legislation. Among the factors to which the delays have been attributed include confusion about issuance procedures, delays in preparation of the cadastral maps, boundary conflicts among land users, and inertia of the local officials charged with carrying out the procedures. Regional differences in completion rates also have been observed. The volume of market activity for sale, lease, or mortgage of use rights is low in most parts of rural Vietnam, and in many cases, transactions are arranged informally between relatives or close friends without formal registration. Farmers in rural Vietnam generally express support for the long-term use rights to land and for the documentation provided through land use right certification. However, previous research (Hare, 2001) indicates that the relative attractiveness of the benefits associated with the land use certificates may vary from place to place. In a similar vein, the literature on China has provided evidence of systematic heterogeneity in the desire for secure use rights in land (Kung, 2001; Yao, 1999; Liu, Carter, and Yao, 1998) and in the desire to engage in land market transactions (Yao, 2000).Our proposed research has three components. The first is a re-examination of the concept of property rights, and consideration of how they may be constructed in the case under examination—that is, as applied to agricultural land in a poor country where the set of supporting institutions may be rather thin. Though the right of transfer has received substantial attention among economists, in particular, we will include other attributes of property rights in our analysis and consider circumstances under which they may or may not dominate transferability in terms of attractiveness to the holder of those rights. This exercise will draw on a broad-based literature spanning economic, legal, and other social scientific treatments of the evolution and theories of property rights.The second part of the research is an empirical investigation of regional differences in demand for secure use rights, as evidenced in farm household data from Vietnam, collected in 1996/97, several years after the 1993 land law was put into effect. On-going research conducted by Hare suggests that there are systematic differences in the way that households view the land use rights certificates to which they are legally entitled, and the way that possession of the certificate influences key economic decisions at the household level. Among the most striking preliminary differences identified in the data are those between the Red River delta and the Mekong River delta regions. Additional data analysis will be conducted to confirm and extend our understanding of these results. We will also explore factors that may help to explain this systematic variation across regions. One of our main tasks this summer is to trace patterns of land tenure arrangements in these two regions prior to the implementation of collectivization which may shed some light on some of the current differences between regions that we observe.The final component of the research is to reconsider our findings from the first two stages in order to determine whether consistent inferences can be drawn between the importance or relevance of the transferability of property rights and circumstances under which such systems (with the right to transfer) are likely to evolve. Possession of the formal government-issued certificate may be an important tool in facilitating the right of transfer. However, the question we raise in the first stage of the research is whether transferability is the most important component of the bundle of property rights in the setting under consideration (rural Vietnam, and possibly by extension, rural China). On the contrary, perhaps key rights evolve and are recognized (albeit informally) at a local level, rendering the possession of legal title less critical. This last stage of the research will also include a broader reading of the literature on the outcomes of land titling schemes in other countries. There have been quite a number of these reforms undertaken in recent years, particularly in countries undergoing market transitions. Therefore the literature is relatively abundant. In this final stage, the case of China will be reconsidered as well, as the results of this research may shed light on why land rights may vary so drastically from place to place, particularly in a country as large and diverse as China. In addition, they may serve to inform the on-going policy discussion regarding the future of both China's and Vietnam's land management systems.Selected BibliographyBrandt, Loren, Jikun Huang, Guo Li, and Scott Rozelle, "Land Rights in Rural China: Facts, Fictions and Issues," The China Journal, 47:67-97. January 2002.de Janvry, Alain, Gustavo Gordillo, Jean-Philippe Platteau, and Elisabeth Sadoulet, Access to Land, Rural Poverty, and Public Action, New York: Oxford University Press, 2001.Demsetz, Harold, "Toward a Theory of Property Rights," The American Economic Review, 57, 2: 347-359, May 1967.Ellickson, Robert C., "Property in Land," 102 Yale Law Journal 1315, April 1993.Hare, Denise, "Implementation of a System of Transferable Land Use Rights Ownership in Rural Vietnam, with Implications for China's Agricultural Land Management Policy," unpublished manuscript, May 2001.Kung, James Kai-sing, Choice of Land Tenure in China: The Case of a County with Quasi-Private Property Rights. Hong Kong University of Science and Technology, 2001.Liu, Shouying, Carter, Michael R., and Yao, Yang, “Dimensions and Diversity of Property Rights in Rural China: Dilemmas on the Road to Further Reform.” World Development, 26, 10:1789-1806, October 1998.Oxfam Great Britain, Landlessness in the Mekong Delta: An Analysis of the Situation in Duyen Hai. Hanoi, 1999a.Prosterman, Roy L. and Jeffrey M. Riedinger, Land Reform and Democratic Development, Baltimore: Th
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