Land reform today, economic superpower tomorrow

March 29, 1996|By Jonathan Power

LONDON -- With his sweeping land-reform decree, Russia's President Boris Yeltsin has performed the 20th-century equivalent of alchemy -- Russian farms once so much dross are now free to become path-setters in economic revival.

Land reform can charge the batteries of an under-developed economy more effectively than any other single measure.

In any country where a significant number of people live from the land, breaking up a non-productive feudal system -- or in Russia's case, an even more unproductive state system -- can produce a surge of economic activity that transforms the countryside and provides large amounts of capital for the second step, the industrial revolution.

One generation to riches

Taiwan moved from rags to riches in a single generation. As the island celebrates its coming of democratic age this week, older citizens recall that its formidable energies were first unleashed when Chiang Kai-shek made land owners of 60 percent of the former tenant farmers.

It was the same story in South Korea where strongman Syngman Rhee made owners of 64 percent of the former tenants and in Japan where a vigorous land reform was carried out by the U.S. occupation administration headed by Gen. Douglas McArthur.

Now Mr. Yeltsin has put Russia on a course to emulate these Asian successes.

Every Russian peasant with a garden plot will now own it. Every worker on a state farm now has the chance to own a share and make it his own.

Another huge country

Across the globe, another country almost as huge as Russia struggles along the same path.

Brazil, fifth-largest country in the world, like so many Latin American countries, has changed very little since the European conquist- adores carved out huge estates with a relatively few owners reigning over thousands of impoverished tenants.

Since the mid-1800s, peasant land-reform movements in Brazil have pushed unsuccessfully for ownership. At last, talk has become action.

The Landless Worker Movement has managed to mobilize the grass roots, and reforming President Fernando Henrique Cardoso recognizes that the small private farm is a sine qua non for progress if the farming sector is to join up with his market-oriented reforms in the rest of the economy.

If President Cardoso succeeds, unlike his predecessors who failed to beat back the opposition of the often violent landlords, Brazil will achieve in the lifetimes of its younger generation its long-held ambition of becoming the first southern superpower.

A botched case

Land reform can do wonders for a moribund economy -- or it can be botched, as it was in Iran. In the mid-1960s, the shah outlined quite a bold land reform, but it had a fatal flaw. He was no real believer in the rural economy, and he spent Iran's vast oil resources in an attempt to gate-crash the industrial revolution.

Unlike in Taiwan, South Korea and Japan, redistribution of land titles was not followed by an infusion of credit, technical expertise and marketing programs. Agricultural productivity fell and food imports shot up. The gap between urban and rural living standards grew to a gulf that left too many country folk with little or no employment, nursing their grievances and waiting for the revolution.

Follow-through

A World Bank study of 41 countries shows that smaller land ownings and broader ownership will lead to an increase in output per acre -- but only if there is follow-through.

The smaller owner farms his land more carefully and intensively. He husbands his resources and maximizes output -- but only if he is given the right education and support.

Mr. Yeltsin's decree is bold. And Brazil's reform could help bring about an economic revolution of Asian proportions.

But success for both lies in the follow-up. Failure to understand that will lead to dashed expectations. And that, as the shah of Iran found, is political suicide.

Jonathan Power writes a column on the Third World.

Pub Date: 3/29/96

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