“Large Land Acquisitions in Developing countries: A three

level approach”

Raffaele Bertini

Department of Economics and Business, University of Florence, Italy

raffaele.bertini@unifi.it 

Paper prepared for presentation at the

“ANNUAL WORLD BANK CONFERENCE ON LAND AND POVERTY”

The World Bank - Washington DC, March 24-27, 2014

Presentation Structure

The paper is structured as follow:

• Game strategy characteristics

• Three levels analysis and final integration

• Main issues related to large land acquisitions

• Conclusions

Game Strategy

• There are two players with two possible choices and consequent 4 possible payoffs,

• Numeric payoffs range from 1 to 4,

There are four possible results ordered as

4 > 3 > 2 > 1.

• “Reward” if both prefer Cooperate C• “Punishment” if both Defeat D.• “Temptation” if one of the player defeats from the cooperation

adopted by the other• “Sucker” if player choices in any case a cooperation choice.

Land Grabbing: Players and Frameworks I

• International phenomenon involving two most relevant actors:

1. Receiving country:poor country, underdeveloped agricultural sector, poor institutional framework, rich in land and water resources,

2. International investor: large company operating at global level in the agricultural sector

Land Grabbing: Players and Frameworks II

• International institutitonal frameworks are very weak in FDI issue,

• Local regulation systems are very fragile,

• Two level of institutional frameworks can be observed: formal and informal,

• Each Level of Analysis presents a precise kind of institutional framework.

Land Grabbing History I

• An African country needs investments by foreign financial and economic actors in agricultural sector,

• This actor is composed by: national and local elitès -R- and the local population and communities -P,

Land Grabbing History II

• Player I is an international company acting in the global market,

• This player acts in a stable country aiming at producing in natural resources rich country agricultural goods in the receiving areas,

Land Grabbing History III

The bargaining process has place in an hypothical table based in three steps:

• 1° level: formal declaration and formality,

• 2° level: informal frameworks and LL norms

• 3° level: hegemonic system with hegemony by I.

Second Best Game I

• Players I and R act a simultaneus game in the first table in a formal international and national institutional and political frameworks,

•I and R declare to implement their best efforts even if they would gain if there arrive at the second best solutions .

Player R

Player I C D

C 1,4 2, 2

D 4,1 3,3

Second Best Game II: H declaration

• This step represents the formal table where the two actors play in order to sign the agreement,

• They appear to be formally and institutionally correct face to the international audience and local population,

• In order to reach the signature of the agreement they declare to prefer cooperate than to defeat.

LL game I

•This second step of the model is played in a table where informal system prevails and the two actors play in a simultaneaus way,

•Each player in the attempt to maximaze its gains choices D “defeats” and hopes that the other player does the same in order to obtain its maximum payoff,

•There is a sort of “silent” agreement in order to reach the maximum payoff by both the players

Player R

Player I C D

C 2,2 1,3

D 3,1 4,4

LL and SBG integration

This table looks at the reasons for the realization of the LL equilibrium stability

Figure 3: 4X4 Game summing up SBG and LL Game

Player P

D D D C C D C C

,Player I D D 7,7 8,5 6,4 7,3

D C 6,6 5,8 5,3 4,5

C D 4,6 8,5 5,5 6,3

C C 3,5 2,7 4,4 3,6

Hegemony Game I

This third step is played in table less homogeneous than in the previous steps with hegemonic power,

•International investor choices to defeat,•P - ‘ black slave’ - is forced to implement its largest efforts to realize the agricultural project,

Player P

Player I C D

C 3,4 2, 3

D 4, 2 1, 1

Final Equilibriums

Player P

C D

Player R C D C D

,Player I C, D 7, 6, 2 7,5, 2 C, D 4, 6,1 4 ,5,1

D, C 10, 2, 4 10,7, 4 D, C 9, 2, 3 9 ,7 ,3

D,D 11, 2, 2 11, 7, 2 D,D 8, 2,1 8, 7 ,1

C, C 6, 6, 4 8, 5, 4 C, C 5, 6 ,3 5 ,5 ,3

The final model iterated shows how the final equilibrium gives the largest gains for the international investors while the

player P obtains one of the lowest payoffs

Summing up the three levels of the analysis:

Commons and Institutions in Large Land Acquisitions II

• At the center of the bargaining process there are receiving country natural resources especially land and water resources,

• Land is the central target of large land acquisitions in looking at producing agricultural goods in receiving countries,

• This resource is seen as a core productive factor in many developing countries economic systems,

• Water can be considered as an item in the “hidden agenda” of the large land acquisition processs.

Commons and Institutions in Large Land Acquisitions II

• Institutional framework represents one of the basic issue to be considered,

• Formal and informal institutions and regulation systems act in the international and national and regional frameworks interacting with the players and determining the final realization and equilibriums,

• Formal and Informal prevail in the first and second level respectively and they mix in the third level where the two levels compenetrate and define the final equilbrium

Conclusions

• The 2x2 Game is played by two Actors I and R- and P- aiming at maximaze their gains

• The game is acted in three steps in a simultaneaus game where power is the same in the two first games and asimmetric in the last level,

• The final equilibrium shows how the I obtains the largest share of the gains while the receiving country’s population is forced to implement the largest efforts in the project’s implementation.

Thank for your questions, suggestions, critics and, last but

not least, attention…