Dr. Edson Teofilo
Special Consultant
Rural Development in the Bank of North-East of Brazil

Good morning.

First of all, I want to thank you for the invitation to take part in this Assembly. It is an honour for me to return here, to Santa Cruz . The Bolivians are like brothers for we Brazilians; there are some common problems but also some common opportunities and these, I believe, will help our respective countries.

I have prepared a text to facilitate the debate, therefore I am not going to deliver an academic conference but instead would like to highlight a few facts which may help the Assembly in its discussions.

When discussing the economic theory of the relation between land and development, we should take into account the thoughts of a very important writer in the current economic world debate, Professor Amartya Sen, in order to recall the social purpose of economic science and its founding principles. Professor Sen states that the economy is a tool, not an end in itself. I feel that these thoughts should represent a fundamental reference for researchers, politicians and academicians alike, so as to understand the real meaning of development; in other words, development is freedom.

The idea that I want to launch for the discussion at this Assembly, is that of identifying the role that access to the land plays in achieving development with equity. If this, in fact, does exist, and if not, what happens - what is the economic theory? What are the differences and the current consensus, and what examples can be shown from the real world. In this respect, the reference that I will use, and the one I know best, is the experience of my own country, Brazil.

I want to emphasize three points for the discussion.

Firstly, there is a World Bank report to be published at the end of this year which states that economic systems, both past and current, have failed in promoting development with equity. We will come back to this issue later.

Secondly, if a relation exists between the redistribution of lands and development. To contextualize this I will refer to some very important texts, well-known in the academic world but very seldom referred to in meetings such as this. These are the very solid theoretical bases which clearly give explanations to all these questions, especially regarding the imperfections of the market and, more specifically, the market of land. We have to understand that land markets do not work well anywhere, but even less so in the economies of developing countries. such as Latin America but also in many other parts of the world.

Thirdly, and my final point, can land promote social autonomy of marginalized groups, which in my opinion should be the primary commitment of any agrarian reform program.

Concerning the failure of the economic systems, the study of the World Bank suggests that the neo-liberal theory is not based on good theories in terms of development. The hypothesis of the economist Simon Kuznets that after an economic growth there is an automatic redistribution of income, of wealth, is not true. This has been the main theoretical base of the liberal and conservative sectors to defend the theory that economic processes have a certain automatism in the future redistribution of income. In Brazil there is an exemplary case of what we name as 'conservative modernization' of the agrarian sector.

There is a consensus, derived from evidence over last 20 years, that there are two fundamental assets to promote social and economic processes: education - the most acknowledged studies link education to a process of development and distribution of income and wealth, and land redistribution. The studies linking development and land are not well-known, are not shared among economists and intellectuals.

In the text I have prepared, I have presented some of this evidence, but the most important issue to understand is why markets do not work; why the market of lands and land leasing is not capable of promoting what has been called 'social optimal', and what this social optimal solution should be, i.e. the allocation of land to the most productive peasants, family farmers, not the extensive producers. There is already sufficient evidence to support this affirmation. Why is the market unable to promote this social optimal? It is very important to understand this fact in order to define public policies needed to change this situation and transform society.

President Mesa - who made a brilliant synthesis of the situation in Bolivia , mentioned the need for building up dialogue between the most conservative sectors and the more radicals who both want to resolve a problem that is real, but in very different ways. It is obvious that the market, the forces of the market, do not have the capacity to do it. But, because of this, there is a need for public policies on land that are able to promote dialogue and, at the same time, pursue the idea of "social optimal'. This means land for who wants to produce, and produce well. It is obvious that there is a social fundamental debt. Those who have the original right to the land - the case of the indigenous peoples, of the peasants who live there - have a basic right to land, but there is also a need for other incentives to help promote economic development without jeopardizing, for example, the conservation of the natural resources. This is not a terminal conflict. It is possible to harmonize the idea of development with equity and the conservation of the natural resources.

Finally, the topic for discussion of any debate is that land is the principal asset to revert a process of social and political domination of the rural poor. It is not possible to pull the poor out of political domination without a wider access to assets, such as land. This is a historical fact.

Incomplete agrarian reforms, as explains Professor. Alain de Janvry, were produced to fail and provide arguments for conservative sectors to say that peasants do not work, do not make profit, do not make the land produce, and from there they construct evidence that is not very precise, to justify their theories.

It is obvious that mere access to land does not resolve the problem of the development, the problem of increased production and productivity. We all agree on this, including peasant movements all over the world. None of them support policies which provide access to land without access to other basic services, technical assistance and credit. We are not here to speak about access to public goods - right to education, housing, healthcare, universal rights, and, therefore rights of peasants.

The agrarian reforms are produced politically by the most conservative sectors of the society. If we want an example of how this happens, we can observe the phenomenon of urban violence, which is the most visible social cost of not distributing land -. Brazil is a clear and indisputable example. And probably there are similar cases of urbanization of poverty and misery: A concentration of violence with very high social and economic costs exists in all the Latin-American countries that have not carried out wider processes of land redistribution. Violence has a very high economic cost and theoretical and empirical evidence of this is already strong.

Paraguay is another interesting example and one which I myself studied for some years. I foresaw at the beginning of the 90s that Paraguay would go through a process of urbanization of poverty. In 1992, the capital of the country, Asuncion , was a poor city but without misery, without shanty towns, without visible poverty. The poverty was concentrated in rural areas. In 1994, the Argentine border which was absorbing part of the rural poverty of Paraguay and also a great deal of the rural poverty of Bolivia in its way to Buenos Aires , was closed. This changed completely the social situation in Paraguay - in 10 years there was urban misery which previously had not existed. The conservative forces of the country did not permit the adoption of a more liberal land law and this provoked an enormous migration from rural to urban areas. And the paradox is that we are speaking about a country that has an enormous natural wealth; water, electricity, a lot of land, few people - there is space for all. Paraguay has only soils type 1 and 2, approximately twenty-five million hectares, like Paraná in Brazil our most successful agro-producer region. Paraguay is like two Paranás put together.

To end, I want to say that wealth and poverty are sub products of the economic and political system; there is no doubt about it. What we saw in case of Paraguay was a political production of urban misery that could have been avoided if the country had adopted a more democratic policy of access to land twenty years ago.

These are some points for debate over the next few days.

I am at your disposal for any further discussion. Thank you very much for your attention.