Land tenure security and agrarian investments in the Peruvian Highlands

Abstract

The abundant empirical studies on the relationship between land tenure security and investment remain inconclusive. This work sheds light on this issue, estimating a simultaneous equation model of 9 different types of land investments and land tenure security using data from the Peruvian agrarian census. This study analyzed the case of the Peruvian highlands, which could be a suitable case study for discussing the importance of land tenure security and land tilting programs on rural development in developing countries due to its agrarian-based economic characteristics and for having an official land-titling program (the PETT). We found that tenure security was significantly and positively related to five land investments among the nine analyzed; however, the size of these effects is small, so its importance is lower than what it is a priori expected on institutional grounds. The effects were also negative for two investments for which customs seemed to be a good way of land management. Land-titling programs in developing countries seem to be a necessary but not sufficient policy approach to promote rural development. Our results indicate that where customs are functioning well, land-titling programs can be complement to but not a substitute for these customary institutions. The impacts of other socio-economic variables suggest that public programs promoting education and training as well as gender equality are important for the promotion of rural development.