transparent process and the land then subject to a compulsory fixed-price
government purchase order. In developing countries land often lacks a market
price and the gap between current land prices based on subsistence agriculture
and land prices based on a future use in industry may be vast, which together
make compensation a very complex and politicized process. For example, the
Mahindra World City Special Economic Zone (SEZ) in Jaipur, Rajasthan, paid
the state government $22,679 per acre, the land cost about $66,000 per acre to
develop and long-term leases for the developed land were sold for $223,000
per acre and for residential plots for approximately $554,000 per acre (Levien,
2011). The third problem is that an efficient land market requires existing
owners to sell land if the price exceeds the financial return that the land can
achieve. Land in developing countries is often a source of subsistence produc-
tion and so acts as insurance in case of unemployment or income loss. A
vicious circle may emerge in a land-scarce agricultural economy, whereby
peasants refuse to sell land without the promise of secure employment, but
without access to land industry is unable to expand to offer that employment.
In presence of these three problems, strengthening the property rights of exist-
ing (small-scale) holders of land may actually hinder the re-allocation of that
land to more productive uses and so slow economic growth.
Both historical and contemporary case studies show that a successful tran-
sition to commercial agriculture and industrialization involves more state-
backed coercion than a De Soto-style spreading of property rights to the poor.
This process has been labelled by David Harvey ‘accumulation by disposses-
sion’,defined as the use of extra-economic coercion to expropriate the means
of subsistence or production for capital accumulation. The English enclosure
movement of the sixteenth and seventeenth centuries saw 50,000 peasants
(from a population of four million) forcibly dispossessed of access to common
land which was transformed into private holdings and subsequently utilized for
more productive sheep farming that supplied the wool to a nascent industrial
export-orientated woollen textile industry (Sarkar, 2007). In Utopia (1516) Sir
Thomas More described it as ‘sheep eat men’. In Singapore land shortages
began to bite in the 1960s and in response the government passed the 1966
Land Acquisition Act and later a 1973 Amendment that granted the state
sweeping powers of compulsory purchase. Compensation for landowners was
considerably lower than potential market prices. During the high-growth era in
Singapore between the 1960s and 1980s land constituted around 80 per cent of
the price of new factories, so government provision of cheap land to industry
represented a major subsidy. The Jurong Town Corporation leased land to
incoming industrialists for 30 years on terms reflecting low official acquisition
prices with the option to renew for a further 30 years (Ermisch and Huff,
1999:28). More recently the same process has occurred in China. One estimate
suggests that 20 million farmers were evicted from agriculture as a conse-
quence of land acquisition between 1996 and 2005,enabling around 5 per cent
of arable land to be transferred to non-agricultural use. This was crucial in
supporting China’s growth based on the export of manufactured goods. The
228 Patterns and Determinants of Economic Growth