Land Grabbing In Developing Countries: A Review

Land Grabbing In Developing Countries: A Review

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Land Grabbing In Developing Countries: A Review

Over the precedent years, large-scale possessions of land in Africa, South America, Southeast, and Central Asia have elicited a bout of news headlines and media reports all over the globe. Lands that had little or no attention especially in the overseas are currently being sought after by global investors. Regardless of evidence from research and media reports, the issue on foreign land deals and the effects they pose on the affected countries is still misunderstood. However, in this case, the major concern with the study lies in the ease of transactions through which global banks have been capable of engaging in land grabbing in several developing countries. The article, Banks face land grab claims in developing world, by Nick McKenzie and Richard Baker provides a representative illustration of the extent to which Australia’s major financial institutions have exceeded their operational and ethical capacity by participating on global land deal; an issue that seems to be uncontrollable as the world delves further into globalization. As such, the objective of this critique is to assess the extent to which the facets of global commerce have enhanced improper business dealings such as the ones noted by McKenzie and Baker. In addition to this, the review will also assess the insufficient role assumed by corporate governance in managing unethical practices among multinational companies.

Literature Review

The literature on international land grabbing is as confounding, as it is difficult to locate based on the political implications it imposes on the involved parties. According to Zoomers (2010, p. 432), data collected regarding the respective issue from most developing countries, especially those in Africa, is considerably scarce and is therefore, limitedly reliable. However, based on information originating from this continent and the significant presence of investing multinational companies within this area, some of the information amassed provides an effective illustration of the situation currently facing most developing countries. Cotula (2012, p. 659) states that certain factors depict the extent to which large-scale attainments of land are progressing in developing countries. For instance, land deals have become more evident within the private sector despite gaining sturdy financial facilitation from respective governments and other foreign partnerships. Adding on, probable boosts in sole land acquisitions, investments based on land and increased land allocations to foreign investors are perceived as representational factors (Cotula 2012, p. 660).

In spite of the lack of considerable evidence, it is evident that national and transnational economic actors have consistently maintained a heavy presence in developing countries due to the value that ‘unoccupied’ land possesses. Even though this respective occurrence is global, it is impossible to negate the different North and South dynamics that are taking place as an outcome of economic and financial freedom. Consequently, economically strong non-Northern states, such as Qatar and Saudi Arabia have exerted massive involvement in the acquisition of land in most developing countries. As such, the pace at which the process is taking place is rapid and broadening with little or no resolutions to curb such practices. Nearly 20 million hectares of land have occurred as land grabs from 2005 to 2009 (von Braun and Meinzen-Dick, 2009). Moreover, the report by the World Bank estimates that global land grab, by 2010, comprised nearly 45 million hectares in lost land due to land grabbing processes by national governments and foreign investors (World Bank, 2010).

Interestingly, of all the developing countries, states situated within Southern and sub-Saharan Africa have been deemed as the locations in which chief land deals have taken place over a decade. The impact of this is illustrated by the near depression of the Madagascar economy after failure of a speculative land deal to occur as planned (Hall 2011, p. 200). Furthermore, key areas in other parts such as South America, Russia, Central America, and Southeast Asia have been targeted for purposes of commodity production and investment. Hence, with such information, it is clear that different processes, aside from the reality of land grabbing, assist in facilitating this procedures. For Hall (2011, p. 201), most of these processes vary from public to private leases concerning the production of biofuel to conservation arrangements to purchases among private investors.

Regardless of this, how is it possible for international financial institutions such as banks to gain involvement in massive land grabbing? Bramley (2014) alleges that global financial powerhouses such as the World Economic Forum (WEF) and the World Bank establish a setting that influences land grabs via initiatives and policies, which enable widespread private investment especially in developing countries. As stated by the non-profit organization Action Aid, public funds and incentives in policy such as cut-price credit and tax breaks are responsible for facilitating such deals, which in turn threaten the livelihoods and lives of farmers in economically unstable states (Bramley, 2014). Adding on, the inclination of governments towards private capital from international financial institutions such as banks influence land grabs based on the assertion that these lands act as collateral for the loans that these institutions provide to developing governments in order to gratify large-scale shortfall within public spending.

The Role of Global Commerce and Corporate Governance in Global Land Grabs

The relationship between national governments and international financial institutions illustrates to which commerce has become globalized in the contemporary age. As noted by Bramley (2014), governments have been able to acquire massive capital from foreign institutions in order to amplify their national incomes by filling their budget deficits. In spite of the benefits of such possibilities, there is still much to consider regarding the implications that global commerce especially in developing countries. Through the globalization of business, companies have been capable of attaining success via different forms of practices, which have been profitable. One aspect of this constitutes international trade. Indeed, the heavily connected environment has provided the platform for trade to be global among countries and even companies. According to Jaffe (2006, p. 67), international trade is one of the key revenue producers for most countries.

The extent to which global commerce has occurred is also evidenced by ease of penetration into developing markets. Through international trade, multinational companies (MNCs) have been capable of entering new segments further enabling them to achieve operational expansion and receive maximum profits. Moreover, the international environment has also provided such firms with the ability to reduce labor costs by engaging in practices such as outsourcing of local labor (Jaffe 2006, p. 75). Aside from such benefits, organizations have also gained novel technology and methods such as those evident in the production processes of most MNCs. Such procedures enable them to decrease the costs involved in manufacturing via increased accessibility to raw materials, cost-effective labor, and proximity to emergent markets. These impacts attributable to the force of globalization of commerce illustrate the extent to which this particular occurrence has unveiled an array of opportunities for different companies based in disparate parts of the global economy.

However, the surge in profit-based activities related to international commerce also reflect the extent to which most of these MNCs have failed at maintaining corporate governance despite the concept being part of their strategic mandates. This deficiency in the notion is reflected by the degree to which land grabs are occurring in developing economies. According to McKenzie and Baker (2014), chief banks in Australia are responsible for financing illegitimate land grabbing in developing countries. Moreover, such institutions have allowed other legally questionable activities such as child labor, illegal logging, and other violations to continue within these economies without considering the unethical aspect of such processes (McKenzie and Baker, 2010). Such occurrences reveal the participation of international institutions in illegal profitable activities as well as the lack of corporate governance within the structure of such organizations. 

Even though the issue of corporate governance seems to be ignored among these institutions, it still assumes an important role especially when applied to financial institutions. Accordingly, fair tenets of corporate governance apply to institutions that provide loans and organizations that attempt to access loans from these institutions. In this respect, banks constitute the chief resources for credit and funding for most organizations. In developing countries, banks, irrespective of the location, maintain an overriding position within the financial structure. Any incident that takes place within the banking segment affects the general investment climate as well as a miscellany of stakeholders. Hence, ineffective regulation via the absence of corporate governance principles possesses the ability to destabilize the economy significantly. This situation is evidenced by the effect that illegal land grabs pose on most affected developing countries.

Nonetheless, what is the correlation between corporate governance and the occurrence of land grabbing in developing countries? As mentioned, good principles of corporate governance manage the extent to which financial institutions engage in ethical and legal business practices. In short, corporate governance does not only provide rules of conduct for organization: it also directs the respective organizations on how to engage in ethical practices that benefit them and their stakeholders as well as the groups around them. Regarding the case encompassing Australia’s banks, corporate governance seems to be considerably lacking especially in light of the business practices that such organizations were accused of performing. Based on McKenzie and Baker (2010), the banks implicated in the respective saga funded overseas companies which exhibited considerable participation especially in the illegal acquisition of land in several developing countries.

As such, the relationship between the surge in land grabbing and corporate governance is evident. By engaging in the financing of such organizations, these financial institutions illustrated the degree to which monetary profits maintain a domineering position over ethically correct activities. Interestingly, the detriment of global commerce is also perceived in the commercial relationship shown by the association of Australia’s major banks with foreign companies. In spite of the positive impacts that the globalization of commerce exudes, this particular case represents a significant illustration of the loopholes encompassing this new force and the lack of appropriate measures to control unethical or illegal business practices on an international level. Similarly, the issues encompassing global commerce and corporate governance seem to resonate even within the circles of international organizations such as the World Bank dedicated towards ensuring financial and economic prosperity for developing countries.

The Way Forward

Undeniably, the rate at which land grab deals are taking place in most developing countries is alarming. In spite of this, calls for action have been called upon especially by not-for-profit organizations, which maintain strong opposing stances against international financial institutions such as the World Bank. As mentioned by Bramley (2014), such institutions create an atmosphere that endorses the large-scale attainment of lands in less developed countries without considering the long-term defects of these activities on the persons directly affected. For instance, the involvement of Australian banks in land grabbing has resulted indirectly in the loss of property for most individuals especially in poor countries. Moreover, the lack of evidence to depict this intervention especially by the overseas computers under contract has diminished the efforts raised by opposing forces in circumventing the occurrence of land grabs in most developing countries.

Hence, is it possible to ensure to prevent the grabbing of land in less developed countries en masse? This question is particularly difficult to answer at the time due to the certain structural factors affecting the design and implementation of positive interventions. Despite the measures taken by non-governmental organizations such as Action Aid in creating public awareness regarding this matter, the issue continues to persist on new levels especially with the rate at which globalization takes place. In addition to this, the internationalization of commerce and the observance of corporate governance generate abstract loopholes that are difficult to contain irrespective of the defects they impose in terms of facilitating this vice. Even though multinational companies and international organizations such as the World Bank are becoming more involved in the matter, it seems as if not much has been done to depict land grab deals from continuing considerably.

To this end, the obvious relationship between global commerce and corporate governance in fuelling land grabbing indicates the strides that need to be taken by involved stakeholders in controlling the power of the international environment. However, with national governments attempting as much as possible to limit their budget deficit by borrowing credit from international financial institutions, then it seems evident that the issue of land grabbing will continue regardless of its detrimental impacts on displaced populations within the developing countries.

References

Bramley, VE 2014, World Bank and aid donors accused of enabling land grabs, viewed 11 October 2014, <http://www.theguardian.com/global-development/2014/may/21/world-bank-aid-donors-land-grabs/>.

Cotula, L 2012, ‘The international political economy of the global land rush: A critical appraisal of trends, scale, geography and drivers’, The Journal of Peasant Studies, vol. 39, no. 3, pp. 649-680.

Hall, R 2011, ‘Land grabbing in Southern Africa: The many faces of the investor rush’, Review of African Political Economy, vol. 38, no. 128, pp. 193-214.

Jaffe, ED 2006, Globalization and development, Chelsea House, Philadelphia.

McKenzie, N & Baker, R 2014, Banks face land grab claims in developing world, viewed 11 Oct. 2014, <http://www.smh.com.au/business/banking-and-finance/banks-face-land-grab-claims-in-developing-world-20140427-zr0bg.html>.

von Braun, J & Meinzen-Dick, R 2009, ‘Land grabbing by foreign investors in developing countries: Risks and opportunities’, in IFPRI Policy Brief, IFPRI, Washington, D. C.

World Bank 2010, Rising global interest in farmland: Can it yield sustainable and equitable benefits? World Bank, Washington D. C.

Zoomers, A 2010, ‘Globalization and the foreignisation of space: Seven processes driving the current global land grab’, The Journal of Peasant Studies, vol. 37, no. 2, pp. 429-447.