This paper develops a theory in which oligarchic ownership of land or other
natural resources may impede entrepreneurship in the manufacturing sector and
may thereby retard structural change and economic development. We show that,
due to oligopsony power of owners in the agricultural labor market, higher ownership
concentration depresses entrepreneurial investments by landless, creditconstrained
households, whose investment possibilities depend on the income
earned in the primary sector. We discuss historical evidence from Latin America,
India, Taiwan and South Korea which supports our theory.
Key words: Credit Constraints; Entrepreneurship; Oligopsony Power; Land
Concentration; Structural Change.