Rural welfare implications of large-scale land acquisitions in Africa: A theoretical framework

Abstract

We study the local welfare effects of large-scale agricultural land acquisitions in Sub-Saharan Africa using a theoretical model that captures the major channels through which land deals might affect rural African populations. We distinguish two scenarios. In the first scenario, the investor plants capital-intensive staple food crops. Displaced farmers compete for a very limited number of jobs on the investment farm and spillovers to the remaining local farmers are rare. In the second scenario, where the investor plants cash crops, potential spillovers through contract farming are larger and production is more labor-intensive and hence provides better employment prospects.