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Common wisdom suggests that foreign land ownership should facilitate the transfer of agricultural technology from developed to developing countries, attract foreign capital flow to developing countries, and enhance the process of capital accumulation. The goal of this paper is to dispute this claim and describe a particular feedback mechanism through which the foreign land ownership can become a barrier for growth and development. The main result of this paper suggests that a policy proposal to enhance the process of growth and development through foreign land ownership accompanied by the transfer of agricultural technology may not always succeed. It is important to recognize that apart from benefits, foreign land ownership can sometimes become an impediment for growth. As a result, a policy maker with a clear goal to speed up the process of development may end up pushing the country even deeper into an underdevelopment trap due to the policy intervention.
