Escaping Ethiopia's poverty trap: the case for a second agrarian reform

Growth-friendly egalitarian distribution of land and smallholder farming notwithstanding, rural Ethiopia continues to face an ever-deepening livelihoods crisis. This paper synthesises the theoretical and empirical literature on Ethiopian and other comparable land institutions, in search of a coherent economic framework for pinpointing the roots of the problem and a menu for sensible policy options. It argues that land privatisation, as an integral part of a second agrarian reform, is necessary for attaining optimal farm sizes, thicker markets and robust industrialisation. A sordid history of political marginalisation of the peasantry makes freehold a superior alternative to more secure state leasehold. For a thoroughgoing agricultural transformation, however, sufficiency entails substantial increases in public investment that are designed to crowd-in private investment. Ethiopia's market-led agricultural development strategy must focus on boosting sustainable growth while ensuring subsistence for all.