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SummaryThe homesteading system instituted in the Philippines in 1903 was intended to stimulate economic development through increased agricultural output from previously unoccupied lands and also to relieve agrarian problems in densely settled parts of the country. A case study shows that while early homesteaders did significantly improve their conditions, the intense demand for land rapidly led to the development of squatting and tenancy. Average farm sizes are declining but there are simultaneously indications of a trend towards concentration of land ownership, which accords with experience in other peasant economies.During the intense concern for economic development over the past 25 or so years, many governments have expressed their faith in the development of new agricultural land as at least a partial answer to a wide range of economic and social problems. These problems include regionally dense populations with inadequate farm sizes, inequitable systems of holding and renting land, inefficient methods of production and marketing, lack of capital and difficulties of capital formation, and low yields from land that is losing fertility through constant cropping. Frequently, ignorance, poverty or the agrarian structure inhibits the adoption of measures for improvement.Those countries with significant areas of little used land resources have tended to rely on developing these resources as an answer to agrarian problems rather than attempting to tackle defects in the whole structure. Since the structure is not changed, it is not surprising that in due course the firmly institutionalised problems of the older areas gradually established themselves in areas of new settlement too. This is essentially what Boeke referred to as "static expansion". More recently, Mellor has pointed out, "Expanding the land area at constant productivity and incomes is not economic development in the usual sense — it is only a holding action in the face of a growing population". Even with rising productivity such as associated with the Green Revolution, there is considerable evidence to suggest the continuation, if not exacerbation, of agrarian problems.By examining in detail a case study of colonisation in the Philippines, this paper will show that even if productivity and incomes in a new area are initially high, the operation of customary economic and social processes is likely to ensure the recreation of traditional problems. Such a conclusion is nothing new. It has been repeated depressingly often not only in recent decades but also of course throughout history.