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South African president Mbeki has characterised the developmental challenge in his country in terms of integrating the structurally disconnected ‘two economies’. On the one hand the modern industrial, mining, agricultural, financial and services sector, and on the other the ‘third world economy’ found in those urban and rural areas where the majority of poor people live.This draft chapter challenges this characterisation and focuses on the rural dimensions of the ‘two economies’ debate. It examines in particular the question of what contribution land and agrarian reform can make to reducing inequality and addressing the structural nature of rural poverty in post-apartheid South Africa.It suggests that the problem needs to be conceptualised in terms of an ‘agrarian question of the dispossessed’, that can only be resolved through a wide-ranging agrarian reform. This must include the redistribution of land and the securing of land rights, but must go beyond land questions and aim to restructure rural economic space, property regimes and socio-political relations. This approach is premised on the potential for ‘accumulation from below’ in both agricultural and non-agricultural forms of petty commodity production, and expanded opportunities for multiple livelihood strategies.The chapter suggests five core propositions as a possible basis for rethinking land and agrarian reform policies and programmes. These are:a wide-ranging programme of land reform is a necessary but not sufficient condition for the resolution of the agrarian question of the dispossesseda decisive break with market-led approaches to land reform is required; these must be replaced by an approach based on the central role of the state, together with progressive forces in civil society, in driving processes of land acquisition and redistributionarea-based land reform is required to create the conditions for agrarian reformparadigm shifts are required to focus state policies on agrarian reformpolicy makers questioning their widespread and deep-rooted scepticism about the potential for smallholder production and their consequent bias in favour of large-scale commercial productionthe multiple and diverse character of the livelihoods of the rural poor, and emerging opportunities for petty commodity production, must be a key focus of policygovernment must recognising its central role as in land and agrarian reform, and devote sufficient resourcesthe active participation of the ‘beneficiaries’ of agrarian reform in processes of policy-making, planning and implementation must be securedland and agrarian reform requires a major investment in capacity building as well as innovative institutional arrangementsThis is a draft chapter for a forthcoming book on “The Land Question in South Africa: the challenge of transformation and redistribution”, edited by Ruth Hall and Lungisile Ntsebeza (2005)