Chinese state has intervened brutally to support the process. China’s Ministry
of Public Security acknowledges that 87,000 public order disturbances broke
out in 2005 alone, a large proportion of which were due to such land grabs
(Sarkar, 2007).
In contemporary India accumulation by dispossession is a political process
utilizing the state’s coercive power to make land available for business in a
context of a rural economy dominated by smallholding peasants and poorly
functioning rural land markets. Formal powers of compulsory acquisition were
established by the Land Acquisition Act of 1894 which enabled the state to
make compulsory purchase of private assets by ‘eminent domain’ for public
purposes with compensation linked to market prices. This law was revised in
2005 as the Special Economic Zone Act, setting a framework for state govern-
ments to acquire land for industrial estates. By 2008 404 SEZs had been
approved covering 54,280 acres. Only 50 per cent of this total had been
reserved for productive purposes and the rest for real estate. Many SEZs stalled
after launching in response to massive political protest. These included the
Salim Group’s petro-chemical SEZ in Nandigram, West Bengal, the Reliance
Group Multi-Purpose SEZ near Mumbai, and the $12 billion POSCO steel
SEZ in Orissa (Levien, 2011). Public infrastructure projects, notably the
Sardar Sarovar dam on the Narmada River in Gujarat, also attracted massive
protest. In response the central government put together the first Policy on
Resettlement and Rehabilitation in 2004 which was revised in 2007 after ongo-
ing protests and emerged as the National Rehabilitation and Resettlement
Policy. The aim was to more carefully quantify the costs and benefits to soci-
ety at large and the impact on affected families in a participatory and transpar-
ent manner (Sampat, 2008).
Key points
- Institutions influence economic growth through incentives to invest in
physical (or human) capital or through stimulating technological diffusion
or innovation and through this total factor productivity (TFP). - Douglass North defines institutions as ‘the humanly devised constraints
that structure human interaction ...Together, they define the incentive
structure of societies and specifically economies.’ - Institutions are often confused with ‘organizations’, which are ‘groups of
individuals bound together by some common purpose to achieve certain
objectives’. Organizations include such groups as political parties, firms,
trade unions, churches, etc. - The nature of the political regime is an important institution. Scholars have
theorized that development causes democracy, that development causes
dictatorship,and that democracy causes development. - The empirical work linking the nature of the political regime to develop-
ment is complex.
Institutions 229