The effects of growth on income distribution depend, of course, on a wide variety of factors, ranging from the initial distribution of assets to the government s policies toward international competition. But some types of growth clearly do not help the poor. The centripetal forces of growth can drain resources away from backward regions, increasing poverty for those left behind. And large development projects can so damage the environment that they uproot groups of the poor and cut off their access to common property resources. A divergence of opinion While economic researchers and policymakers now generally agree that growth and redistribution must go hand in hand, some approaches and policies remain hotly contested.
Land reform is probably the most controversial.
Most major land reforms have taken place in the context of war or social revolution. Even then, as in Bolivia and Mexico, they have not always achieved much reduction in poverty. Moreover, even when nonconfiscatory land redistribution is politically feasible and is carried out in normal, nonturbulent times, the economic effects have been ambiguous. In traditional agriculture, where the use of farm machinery is limited, economies of scale are not necessarily substantial. In that case the small family-operated farm created in a land reform program can have a labor cost advantage and be more productive than the large farm.