Pakistan, the Military and Land Reform

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Pakistan, the Military and Land Reform
Stephen Orme Senior Research Project December
7th, 2006
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Pakistani Agriculture

• Major Crops
• Wheat, Maize, Rice, Cotton and Sugarcane
• Two cropping season
• Kharif (Summer) and Rabi (Winter)
• Water availability remains a key issue
• Cropped area remains static at 22 million
  hectares

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Pakistani Agriculture

• Generates 25 of GDP
• Employs 42 of the labor force
• 65 of the population is rural
• Despite growth
• Pakistan remains a net food
• importer

Economist Intelligence Report, 2005
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Research Question

• How have the military governments affected
  Pakistani agricultural production?

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Land Reform

• Military rulers started and ended land reform
  efforts in Pakistan
• Land and Tenancy Reforms, 1959
• Ceiling of 500 irrigated acres and 1,000
  unirrigated acres
• Land and Tenancy Reforms and
• Land Reforms Act, 1972, 1977
• Ceiling of 150 irrigated acres and 200
  unirrigated acres
• General Zias military coup in July 1977
• His government ignored these acts

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Agriculture and the Military

• Policies created a political economy conducive to
  land concentration
• Economic changes created the incentives
• Introduction and rapidly increased use of
  tubewells, High Yield Varieties, pesticides,
  fertilizers, and tractors
• Made traditional sharecropping agreements less
  profitable, while increasing the profitability of
  self-operation

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Literature

• Nabi, Hamid and Zahid (1986)
• The Agrarian Economy of Pakistan
• Issues and Policies
• Show a negative relationship between farm size
  and value of total output per acre
• Mentions the issue of supervision briefly

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Principle-Agent Model

• Large land owners face high supervision costs
  when hiring labor
• Choose a sub-optimal combination of labor and
  capital

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Econometric Model

• Used a Cobb-Douglas production function
• Total output per acre
• a ß1(Inputs per acre)ß2(Farm size)
• ß3(Land Concentration)e

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Results
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Conclusions

• Results suggest the expected relationship, but
  generally lack significance.