The political economy of land and water grabs

Foreigners have invested in international land assets for many centuries, but the recent increase in ‘land grabs’ appears to be a ‘bad’ form of foreign direct investment (FDI). Unlike FDI that shares the gains from trade with locals over a longer time horizon, land grabs maximise unsustainable returns in the short run with inadequate compensation to local communities. For the purposes of this chapter, we will therefore divide deals (or investments) into two types: ‘land grabs’ that transfer land and water rights from existing users without fair compensation and FDI that does provide fair compensation. ²