Dynamics of the North–South Capital Flows or Rise of South–South Land Deals? Features of Land Acquisition in Ethiopia

Abstract

Transnational land deals are among the most contested but inadequately understood topics. In this paper, we focus on the features of large‐scale transnational land deals (LSTLDs) in the Global South through an examination of Ethiopia. We apply a mixed method (qualitative and quantitative) research design.Results indicate that in 2005–2015, the government leased nearly 2·47 million ha of the country's approximate total 114 million ha area and offered 11·5 million ha of cultivable land to domestic and transnational investors. We explore the prevalence of LSTLDs deals by companies of the Global South, particularly entrepreneurs from India. Ethiopia's example validates emerging arguments on the rise of South–South investment deals rather than the established explanation of North–South capital flows. However, 75% of the land deals show poor performance. The study shows that LSTLDs have contributed to raising domestic agricultural production but have resulted in non‐performing loans of the banks of the host country. In sum, the land deals have resulted in financial grabbing, where Ethiopian banks end up with non‐performing loans and then must chase investors to settle the approximate €791 million in loans that investors borrowed for their projects. Copyright © 2017 John Wiley & Sons, Ltd.

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