Barrio study links land ownership to a better life

Barrio study links land ownership to a better life
By MATT MOFFETT, AP

Eds: Via AP

By MATT MOFFETT

The Wall Street Journal

BUENOS AIRES - Mercedes Almada and Valentin Orellana both live in San
Francisco Solano, a barrio settled by squatters almost 25 years ago on
the fringes of the Argentine capital. They established households on
identically sized lots and worked similar blue-collar jobs for
comparable wages - she in sewing, he in a factory. They endured the
same hardships, including an effort by Argentina's 1980s military
government to bulldoze the settlement.

Today, Mrs. Almada lives in a neat colonial-style home with a slab roof
supported by pillars as solid as oaks. The six members of the Almada
household have rooms of their own. A daughter finished high school and
one son finished technical school.

Mr. Orellana's house is made of rough looking cinder blocks and
concrete, with thin posts supporting a corrugated zinc roof. It is so
cramped that some of the eight family members have to sleep in the
dining room and kitchen. None of the children have made it past seventh
grade.

Why are the Almadas moving up in the world while the Orellanas remain
stuck behind?

A provocative research project attributes much of the disparity to a
single factor: Mrs. Almada has title to her land; Mr. Orellana does
not. The San Francisco Solano study, conducted by two Argentine
universities and Harvard Business School, hasn't been formally
published yet. But international development experts say it is shedding
light on a key question for developing economies: Does land "titling"
help lift people from poverty?

In Latin America, about one-quarter of urban residents are either
squatters or are living in unauthorized housing. In cities throughout
the developing world, it is common for squatters to seize land, build
houses on it, and then to agitate for the government to grant them
titles.

The Argentine study followed 1,800 squatter families who in 1981
occupied a one-square-mile piece of what they assumed was public land.
It had once served as a garbage dump. Through a quirk of the legal
system, roughly half of the settlers in the heart of the neighborhood
gained title to their properties, while the other half didn't. The
researchers found that over the course of two decades, the title
holders surpassed those without them in a host of key social
indicators, ranging from quality of house construction to educational
performance to rates of teenage pregnancy.

Households with titles didn't earn more money than those without them
and had access to only a modest amount more credit. Nevertheless, they
adopted a more entrepreneurial mindset and shucked the fatalism and
fear of being tossed off their land that mark the poor throughout the
region. They believed hard work would pay off for their families.

"You give people titles and they start to feel they belong to society,"
says Harvard-trained economist Ernesto Schargrodsky of the Torcuato Di
Tella University, who studied the barrio with Sebastian Galiani of
University of San Andres and Rafael Di Tella of Harvard Business
School.

South America is grasping for lessons from its 20-year experiment with
free-market economic policies. The region initially embraced a broad
agenda of privatization, trade liberalization and fiscal austerity
pushed by the U.S. Property titling was encouraged as an adjunct to
these changes. But the lives of most of the region's people did not
improve the way advocates had hoped.

The protests that greeted George Bush in Argentina on Friday, where he
attended a failed summit of the hemisphere's presidents, signal the
broad dissatisfaction over this result. When economic crises rocked
Argentina and Brazil a few years ago, pragmatic leftist leaders rose as
part of a backlash against the changes. Now, many Latin American
leaders are taking a cafeteria-style approach to capitalism - picking
and choosing policies that suit them and rejecting those that seem too
hard or controversial. Trade liberalization in the region has stalled.

But titling has retained considerable appeal. Brazil, Peru, Panama,
Paraguay, El Salvador and some provinces in Argentina maintain titling
programs. Such programs offer a politically popular and inexpensive way
to provide opportunity for the urban poor to bootstrap themselves out
of poverty.

Some skeptics say there is little hard evidence to support claims that
land ownership helps the developing world's poor. They cite the
economic success of China, which only recently loosened restrictions on
private property, as evidence that the value of ownership has been
oversold. In parts of Cambodia, titling programs have left the urban
poor vulnerable to violence and harassment from speculators who sought
their land. The critics argue that scarce development dollars should be
invested in projects to build infrastructure and to improve the
environment.

In San Francisco Solano, the difference made by land ownership is
visible along the muddy streets where boys fish for frogs in the
drainage ditches. On a stretch of 816th Street where residents own
their lots, the Quevedo family is finishing a brick addition to their
sprawling house. Florinda Gonzalez boasts that her older son recently
added a second floor to the house, and that her younger son completed a
technical-school course to become an electrician. Felicia Cuevas talks
with pride of how well her son is doing in the first grade of the
private school he attends.

On a part of 893rd Street where residents don't hold titles, there is
little evidence of such dynamism. Dominga Abalo has her hands full
trying to ride herd over the brood of kids who live in her crumbling
brick hut. Ricardo Gonzalez frets about finding money to finish
rebuilding his weather-beaten roof, a project that has been stalled for
two years. As chickens peck the ground at her feet, Norma Olive worries
about a teenage son who dropped out of school.

Interest in titling has been sparked by Peruvian economist Hernando de
Soto, whose best-selling books argue that guaranteeing urban property
rights is a precondition for alleviating urban poverty. Marginalized
people can use land titles as collateral to obtain bank loans and to
participate more fully in the economy, he says. Mr. de Soto has a host
of prominent international supporters, including Bill Clinton, who a
few years ago joined the Peruvian in Ghana for the launch of a titling
program.

Governments throughout Latin America, as well as in countries like
South Africa, Turkey and Thailand, have experimented with Mr. de Soto's
ideas. Multinational organizations such as the World Bank have loaned
hundreds of millions of dollars to support such projects.

The way San Francisco Solano was settled makes it a "natural
experiment" for testing titling's effect. "It's a dream kind of
empirical study ... a treasure," says Nobel Prize-winning economist
Douglass C. North, a specialist in property rights at Washington
University in St. Louis.

In November 1981, a group of landless families led by a Roman Catholic
priest, Raul Berardo, marched into San Francisco Solano and erected
huts of scrap wood, metal, cardboard and plastic sheeting. Eager to
someday gain land titles, the squatters carefully followed zoning
rules, pacing off standard 30-by-100-foot lots and leaving room for
streets. "We wanted to live in a normal neighborhood, not a slum," says
Emilio Gondret, an original settler.

Shortly after the squatters arrived, the repressive military government
then ruling Argentine sent a bulldozer to flatten the shantytown. When
a group of women and their children formed a line in front of the
bulldozer, the driver, a civilian, stopped the machine and walked away.
Subsequently, the military tried to block delivery of food, fresh water
and building materials to the barrio.

In mid-1982, the government collapsed suddenly after it lost the war
over the Falkland Islands to the United Kingdom, and official animosity
toward San Francisco Solano ended. But the squatters faced another
headache: The land they had seized was not public, as they had thought,
but had 13 private owners.

Argentina's new civilian government wasn't free to hand out land titles
until it reached compensation agreements with the owners. Eight of them
accepted government buyout offers, but the five others got into battles
with the government over financial terms of the offer in Argentina's
slow-moving courts. Between 1989 and 1991, squatters on 419 lots in the
center of the neighborhood received land titles from the government.
The people on the 410 remaining plots didn't, and still haven't. "After
such a hard fight, it was painful to accept that many of us would not
own our land," says Raul Salinas, a squatter who hasn't gotten a title.

For the university researchers looking to study the effect of titling,
the quirk was fortuitous. "Basically the Argentine court system helped
run the experiment for them," says Robert Lucas, a Nobel laureate
economist at the University of Chicago.

Lidia Salvi Rojas, a resident who received a land title, said the
victory motivated her to transform her hut into a decent house. She and
her husband shoveled out a thick layer of muck from the lot, a mix of
glass, leather and garbage, and brought in several truckloads of
topsoil. Over several years, they replaced the fiberboard walls with
brick and the corrugated roof with a slab. They financed the
construction with money she saved working as a maid and that her
husband earned in a factory.

"I didn't mind the work because it was my own property," she says.
Today, she occupies a modern-looking ranch house with a satellite dish
on the roof and ornate security grill-work on the doors and windows. A
smooth cement sidewalk leads to the tree-shaded front yard. Mrs. Salvi
and her husband laid the walk themselves because the government doesn't
do that kind of work in new barrios.

After she had her house, Mrs. Salvi focused on making sure her children
surpassed her own primary-school education level. Her 19-year-old son
recently finished high school. Her 15-year-old daughter is taking a
special high-school course in chemistry, even though it requires a long
bus ride to another part of town. Her 13-year-old is still in primary
school.

A few blocks away, Rosa Barbosa, one of the unlucky ones who have not
received a property title, has made much less progress. After settling
here, she and her husband raised enough money selling flowers and doing
odd jobs to replace her fiberboard hut with a squat brick house. "I was
waiting for the title before we invested more," she says. "I'm still
waiting."

As the years passed, Mrs. Barbosa gave up on home improvements. Today,
electrical wires droop from the living-room ceiling, the plaster is
chipped, and the corrugated metal roof leaks. There is no bathroom.
Instead of a sidewalk in front of the house, there is a dirt patch that
turns to mud when it rains.

Most of the nine children she has raised didn't get much of an
education, dropping out before high school. A daughter and a
daughter-in-law both got pregnant at 15. "Maybe the grandchildren can
make this a decent place to live in," she says.

The study, based on more than 600 interviews conducted by Messrs.
Galiani and Schargrodsky's research team, revealed broad differences
between residents who own their land and those who don't. Landowning
households averaged about five members, compared with six for the
untitled. Only about 8 percent of adolescent girls in titled households
got pregnant, compared with more than 20 percent in the untitled
households. Children from 5 to 13 years old in titled households had
lower rates of school absenteeism and completed about one-half year
more of school than their untitled counterparts.

The researchers theorize that a title turns a house into an "insurance
and savings tool" that can provide security for owners during old age
or bad times. That reduces their need to rely on large households with
many children and extended-family members to provide income in tight
situations. It also may enable landowning households to concentrate
more on educating each household member, they say.

The investigators concluded that titles improved access to credit only
slightly. Banks appeared to have a deeply ingrained reluctance to lend
to the poor, in part because of the cost and difficulty of foreclosing
in Argentina's legal system. But even without bank loans, they said,
landowning families improved their homes substantially by squirreling
away cash and doing the work themselves. Architects affiliated with the
study concluded that homes on titled lots had sturdier walls and
sounder roofs, were more spacious and had better sidewalks.

An accompanying study, co-authored by Mr. Di Tella, detected a
difference in the attitude of landowners. They were more materialistic
and individualistic, and more inclined to say that money was important
to happiness, and that individual initiative leads to success.

The researchers found that landownership status seemed to make no
difference in employment or income. But it did seem to affect the way
residents spent their money, and their aspirations and expectations.
The researchers figure that the children of the landowners could
eventually earn significantly more than the children of the untitled.


11/09/05 12:05 EST


Copyright 2005 The Associated Press. The information contained in the
AP news report may not be published, broadcast, rewritten or otherwise
distributed without the prior written authority of The Associated
Press. All active hyperlinks have been inserted by AOL.

.

Quantcast