Land redistribution and the South African economy

Abstract

Land redistributive policies can be viewed as effective tools for reducing rural poverty mainly because agriculture continues to be a major source of rural livelihood and a contributor to rural economic growth. For the structural changes and economy-wide impacts, including behavioural changes of rural land distribution, to be assessed and captured through time, a South African Social Accounting Matrix can be used as a database to construct a dynamic computable general equilibrium simulation model to simulate the potential impact on household welfare in South Africa. This study seeks to assess how government redistributive policies may affect household welfare in short- and long-run, focusing on poverty and income distribution in South Africa by applying a dynamic computable general equilibrium microsimulation model. The results showed that rural land distribution increases poor household income through an increase in factor by an average of 0.828. However, for most macroeconomic variables, the impact is negative in the short-run with a gradual increase in the long-run. The results support the claim that rural land distribution coupled with agriculture investment and government support can be effective in improving household welfare.