Land Rights and Access Indicator

Description

This indicator evaluates whether and to what extent governments are investing in secure land tenure and property rights.

Relationship to Growth & Poverty Reduction

Secure land tenure plays a central role in the economic growth process by giving people long-term incentives to invest and save their income, enhancing access to essential public services, allowing for more productive use of time and money than protecting land rights, facilitating use of land as collateral for loans, and contributing to social stability and local governance. 1  Improvements in tenure security also favor growth that is “pro-poor” because the benefits generally accrue to those who have not possessed such rights in the past and those who are affected most by high property registration costs. 2  Land policy reform can be particularly meaningful for women: research shows that when women have secure access to land and are able to exercise control over land assets, their ability to earn income is enhanced, household spending on healthcare, nutritious foods, and children’s education increases, and human capital accumulation occurs at a faster rate. Women’s ability to inherit and possess control rights to land also serves as a crucial social safety net. 3 Beyond land, property rights generally contribute to economic growth and poverty reduction. 4

Methodology

This composite indicator is calculated as the weighted average of three indicators. Access to Land is weighted 50% and Days and Cost to Register Property are each weighted 25%.

  • Access to Land:  Produced by IFAD, this indicator assesses the extent to which the institutional, legal, and market framework provides secure land tenure and equitable access to land in rural areas. It is made up of four subcomponents: (1) the effectiveness of the land tenure system; (2) the effectiveness of land markets; (3) the equitable management of communal lands; and (4) the existence of gender based impediments to access. IFAD’s operational staff base their assessments on a questionnaire and guideposts identifying the basis of each scoring level, available at  https://webapps.ifad.org/members/gc/42/docs/GC-42-L-6.pdf or https://webapps.ifad.org/members/eb/125/docs/EB-2018-125-R-4-Add-1.pdf.  Past datasets can be found in the documents of IFAD’s governing council https://webapps.ifad.org/members/gc.
  • Property Rights (v2xcl-prpty): Produced by the Varieties of Democracy Institute (V-Dem), this index measures the rights to acquire, possess, inherit, and sell private property, including land. It measures both de jure limits on legal property rights, but also de facto limits that may come in the form of customary law, religious law, common practice, or social norms. This indicator is assessed separately for men and women, and then averaged together. V-Dem gathers these data by surveying experts and aggregating their answers into a single index. More information on V-Dem’s methodology can be found here https://www.v-dem.net/en/our-work/methods/.

MCC Aggregation Methodology

MCC’s Land Rights and Access Score = [ 0.5 x Normalized IFAD ] + [ 0.5 x (Normalized V-Dem) ]

This index draws on 2018 “Access to Land” data from the International Fund for Agricultural Development (IFAD) and 2020 data from V-Dem on Property rights (v2xcl-prpty). Country scores are reported on the Scorecards as 2020 data.  When IFAD data from the current year is missing, normalized data from V-Dem is used.  When V-Dem is missing data, the indicator is considered missing and a country will receive an N/A for this indicator on the scorecard.

Since each of the two sub-components of this index have different scales, MCC created a common scale for each of the indicators by normalizing them. Please see equations below. Both scales are inverted so that a higher score corresponds to better performance.

MCC Methodology to Normalize IFAD and V-Dem Data:

  • Normalized IFAD = 1 – ((Maximum observed value – Country X’s raw score) ÷ (Maximum observed value -Minimum observed value))
  • Normalized Property Rights  = 1 – ((Maximum observed value – Country X’s raw score) ÷ (Maximum observed value -Minimum observed value))

For example, to calculate a given country X’s score, MCC first finds the maximum and minimum value for that year. MCC then subtracts country X’s score from the maximum to get the numerator and subtract the minimum from the maximum to get the denominator. MCC divides the numerator by the denominator to get the inverted normalized value. Next, MCC subtracts this quotient from 1, to get the normalized value for a country. Finally, MCC averages the normalized values for each source together. If IFAD is missing, the normalized V-Dem score is used, but if V-Dem is missing the indicator is considered missing and assigned an “N/A” because V-Dem has higher country coverage and more recent data.

In FY22 MCC revised its methodology for this indicator to expand the populations and concepts covered and to focus more on broad-based property rights.  As a result, the scores from FY22 are not comparable to scores from FY21 and earlier. For more information about how MCC is making these business climate indicators more inclusive, visit https://www.mcc.gov/blog/entry/blog-101921-financial-inclusion.

Source

Footnotes
  • 1. World Bank. 2003. Land Policies for Growth and Poverty Reduction. Washington D.C.: World Bank. Besley, Timothy. 1995. Property Rights and Investment Incentives:  Theory and Evidence form Ghana. Journal of Political Economy 103(5): 905-93. Keefer, P., and S. Knack. 2002. Polarization, Politics, and Property Rights: Links between Inequality and Growth. Public Choice 111(1–2): 127–54.; De Soto, Hernando. 2000. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.; Birdsall, N., and J. L. Londono. 1997. Asset Inequality Matters: An Assessment of the World Bank’s Approach to Poverty Reduction. American Economic Review 87(2): 32–37. Acemoglu, D., S. Johnson, and J. Robinson. 2001. The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review 91 (5): 1369-1401. Rodrik, Dani. 2000. Institutions for High-Quality Growth: What They Are and How to Acquire Them. Studies in Comparative International Development 35(3): 3-31.; Alden-Wily, L. 2002. Comments on the Legal Basis for Land Administration in an African Context. Paper presented at the World Bank Regional Land Policy Workshop, April 29–May 2, Kampala, Uganda. The empirical literature on secure land tenure also suggests a strong link to sustainable natural resource management. See A. Cattaneo, A. 2001. Deforestation in the Brazilian Amazon: Comparing the Impacts of Macroeconomic Shocks, Land Tenure, and Technological Change. Land Economics 77(2): 219–40. World Bank. 2003. Land Policies for Growth and Poverty Reduction. Washington D.C.: World Bank.) Cross-national empirical studies also demonstrate a strong relationship between rule of law – a close correlate of secure land tenure – and environmental protection. See Daniel Esty and Michael Porter. 2005. National environmental performance: an empirical analysis of policy results and determinants. Environment and Development Economics 10: 391–434; Robert T. Deacon. 1994. Deforestation and the Rule of Law in a Cross-Section of Countries. Land Economics 70: 414-430.
  • 2. Ravallion, M., and Datt, G. 2002. Why has economic growth been more pro-poor in some states of India than others? Journal of Development Economics 68 (2): 381-400. Christiaensen, L., L. Demery, and S. Paternostro. 2003. Macro and Micro Perspectives of Growth and Poverty in Africa. The World Bank Economic Review 17: 317-334. World Bank. 2003. Land Policies for Growth and Poverty Reduction. Washington D.C.: World Bank.
  • 3. World Bank. 2003. Land Policies for Growth and Poverty Reduction. Washington D.C.: World Bank. Adesina, A. A., and K. K. Djato. 1996. Farm Size, Relative Efficiency, and Agrarian Policy in Côte d’Ivoire: Profit Function Analysis of Rice Farms. Agricultural Economics 14(2): 93–102. Adesina, A. A., and K. K. Djato. 1997. Relative Efficiency of Women as Farm Managers: Profit Function Analysis in Côte d’Ivoire. Agricultural Economics 16(1): 47–53. Udry, C. 1996. Gender, Agricultural Production, and the Theory of the Household. Journal of Political Economy 104(5): 1010–46. Dolan, C. S. 2001. The ‘Good Wife’: Struggles over Resources in the Kenyan Horticultural Sector. Journal of Development Studies 37(3): 39–70. Quisumbing, A. R., and K. Otsuka. 2001. Land, Trees, and Women: Evolution of Land  Tenure Institutions in Western Ghana and Sumatra. Research Report no. 121. International Food Policy Research Institute, Washington D.C. Deere, C. D., and M. Leon. 2001. Empowering Women: Land and Property Rights in Latin America. Pitt Latin America Series. Pittsburgh: University of Pittsburgh Press. Schultz, T. P. 1999. Women’s Role in the Agricultural Household: Bargaining and Human Capital. Discussion Paper no. 803. Yale University, Economic Growth Center, New Haven, Connecticut. Strickland, Richard. 2004. To Have and To Hold: Women’s Property and Inheritance Rights in the Context of HIV/AIDS in Sub-Saharan Africa.
  • 4. Lohi J. (2019) Property Rights and Economic Development: The Case of Sub-Saharan African Countries. In: Hall J., Harper S. (eds) Economic and Political Institutions and Development. Springer, Cham. https://doi.org/10.1007/978-3-030-06049-7_4; Joshua Ang & Jason C. Patalinghug, 2021. “Property rights and economic growth: A dynamic GMM analysis,” Economics Bulletin, AccessEcon, vol. 41(3), pages 1387-1398; Meinzen-Dick, R., Kameri-Mbote, P., & Markelova, H. (2009). Property rights for poverty reduction?. New York, NY, 10017, 86; di Gregorio, Monica; Hagedorn, Konrad; Kirk, Michael; Korf, Benedikt; McCarthy, Nancy; Meinzen-Dick, Ruth Susee (2008) Property Rights, Collective Action, and Poverty: The Role of Institutions for Poverty Reduction, IFPRI: CAPRi Working Papers. doi: 10.22004/ag.econ.44354.