These factors have profound implications for factor use, employment generation, and welfare in rural areas. First, while small farmers were often driven off their traditional lands to eke out a living in marginal and environmentally fragile areas, much of the best agricultural land (75 percent of the land suitable for crop production) was devoted to extensive livestock grazing or not farmed at all due to violence (Heath and Binswanger 1996). This suggests that there are indeed large tracts of unutilized or underutilized land which could be subjected to land reform in order to increase agricultural productivity - a notion in line with available empirical evidence.<sup>13</sup> Second, rather than making use of labor, economic growth has been labor-saving. Since the 1950s, the rate of growth of rural employment has been significantly lower than aggregate economic growth, which is surprising even by the standard of other Latin American countries (Mision Social 1990). This appears to have increased peasants' inclination to support, or at least live with exceptionally high levels of rural violence that increasingly constitute a drag on the whole economy (estimates in the Colombian press put the losses associated with rural violence at about 15 percent of GDP). The government sees the reduction of rural violence as an important goal of land reform.

Third, structural adjustment made the lack of adaptability in the large farm sector particularly blatant. Elimination of credit subsidies caught large mechanized farms that cultivated mainly traditional crops with minimal labor inputs in a debt-trap that made them unable to adjust to the new environment and take advantage of the opportunities for exports of nontraditional and more labor-intensive crops. Unable to respond to the loss of agricultural protection in a productive way, the large farm sector resorted to largescale lobbying. Establishment of a dynamic small farm sector would, it was hoped, enable Colombia to capitalize on its agro-ecological diversity and significantly increase its exports of traditional and nontraditional crops.

None of these concerns are new. The maldistribution of productive resources, especially land, was identified as one of the root causes of economic stagnation by a World Bank mission in the 1950s. In 1961, the government established the National Land Reform Institute _(InstitutoNacional Colombiano de Reforma Agraria_ or INCORA), to bring about a more equitable distribution of assets in the rural economy. However, even though considerable amounts of resources were spent on land reform (INCORA's average annual budget in the late 1980s was about US$140 million), most was spent on a

> '3 Balcazar (1990) summarizes the existing literature in three points, namely (i) small farms farm more intensively than large farms, as measured by value of output per unit area; (ii) between 1973-76 and 1988 average physical yields on small farms have increased by about 82% (this seems to be an unweighted average across different types of crops) whereas those on large farms have remained stagnant; (iii) regional as well as commodity-specific studies do not find any systematic relationship between farm size and adoption of new technology or improvements in productivity.

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