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Abstract
The period of 1994 to 2004 was one in which rural households in Peru
experienced dramatic changes in ownership rights through a large nation-wide land titling
program and a significant opening of the economy to international trade. This paper takes
this prime opportunity to examine whether lack of ownership rights presents a significant
barrier to the adoption of commercial crops and/or modern farming practices as a result to
changes which reduced domestic market distortions, opened up the economy and thereby
presumably altered relative prices between traditional agricultural crops and those
produced primarily for export. To the extent that participation was quasi-exogenous to
other household features influencing production choices, the titling program serves as a
natural experiment in tenure status by enabling us to compare the influence of price
incentives across untitled and newly titled rural households. The econometric results
confirmed that changes in these relative prices increased the likelihood that households
would shift production towards these new export products. These tendencies appear to be
strengthened if the household obtained title to their property over the period, which
indicates that weak property institutions may inhibit the degree to which households can
reap the benefits of a globalize market place. Moreover, our results indicated high returns
to adoption of export products and that households which began producing an export
oriented crop over the period were much less likely to be classified as impoverished in
2004. The obvious implication is that those who were unable to alter production due to
reasons such as geographical location, access to credit, or lacking title to their property continued to produce traditional crops and were not able to escape poverty. This finding
reaffirms the idea that liberalizing markets must be accompanied by appropriate social
programs or institutional reforms directed to the unique situational problems of different
subgroups in poverty if the broader poverty issue is to be improved.