However, since land is one of the most important agricultural resource Agrarian Reform is concerned largely about the redistribution of land.
Agrarian Reform has several effects on the rural economy. These are:
Agrarian Reform may decrease the agricultural productivity if collectivization and land fragmentation is introduced. Productivity may be enhanced by the use of new inputs and technology in the agricultural process.
In the rural areas Agrarian Reform can minimize poverty and also improve the real per capita income.
Agrarian Reform measures increase the productivity and therefore income will rise. So this will improve the living standard automatically.
Agrarian Reform measures often result in better employment. In some cases the introduction of a new technology may bring about displacement of labour.
Agrarian Reform can change the capital output ratio that is needed for any economic development.
Agrarian Reform has a significant influence in the economic and political structure of the rural areas. To bring about equity land is redistributed from the big land owners to the small and marginal land owners.