broader socio-economic phenomena such as social cohesion and crime (Fajnzylber et al. 1998). In developing countries, credit constraints may prevent poor households from making profitable but indivisible investments - such as sending talented children to school. This may give rise to "poverty traps", i.e. situations where poverty is perpetuated only because households lack the endowments needed to overcome market imperfections that would allow them to make otherwise profitable investments (Fafchamps and Pender 1997; Jalan and Ravallion 1999). At the cross-country level, even though the relationship between _income_ inequality and growth is ambiguous (Banerjee and Duflo 1999), the distribution of _assets_ seems to be strongly associated with subsequent growth performance (Birdsall and Londono 1998; Deininger and Squire 1998; Deininger and Olinto, 2000).

In this paper, we examine actual implementation of a program of redistributive reform using as an example the case of land reform in South Africa. This is of interest for a number of reasons. First, in South Africa, post apartheid governments have moved with determination to implement redistributive programs to overcome the legacy of discriminatory policies and practices they inherited. Land reform is one out of three major redistributive policies that are backed by a broad consensus on the need for redistributive programs to redress inequities in access to resources and economic opportunities. Second, ever since its conception, the South African land reform program has been accompanied by a debate on whether the goal of poverty reduction can be combined with a focus on improving productive efficiency (e.g. van Zyl et al. 1996; Levin and Weiner 1997; Lipton, Ellis, and Lipton 1996). This discussion is far from over (see Cousins, 2000) but thus far, most of the evidence on the extent to which land reform has accomplished its goal remains anecdotal. Finally, South Africa chose to follow a decentralized model of "negotiated" land reform whereby poor people receive a grant to enable them to acquire land. As this model is currently being debated or implemented in a number of other countries including Brazil, Colombia, Guatemala, Honduras, the Philippines, and Zimbabwe, evidence on emerging experience is of broader interest.<sup>2</sup> We use data from a recent survey of land reform beneficiaries to examine to what extent the South African land reform program has been successful in combining equity and efficiency. To do so, we examine evidence on the targeting and productive impact of the land reform program, the degree to which the program lived up to expectations, and the scope to improve performance through modifications in program design. Section two presents a general description of rural poverty and the agricultural structure

> 2 For Brazil see Buainain et al. 1999, Navarro 1998 and the documents at http://www.dataterra.org.br and http://www.nead.gov.br; for Colombia Machado and Suarez 1999, for Guatemala see the Peace Accords (Government of Guatemala 1996), for Honduras see Korczowski, 1999; for the Philippines see Hayami et al. 1990 and Deininger et al. 1999, for Zimbabwe see Moyo 1998 and Government of Zimbabwe 1998. The underlying concept of providing a grant for poor people to acquire land has also been applied in India (Agarwal, 1998).

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