The aim of this paper is to analyse the relationship between the land market failures and the economic growth in Brazil. We use an overlapping model including two sectors, agricultural and industrial. The land is both a specific factor for agriculture and an asset that can be substituted to the capital used in the industry. The trade-off between land and capital holding depends, among other factors, on the transaction costs on the land market. These costs result from land insecurity and generate a decrease in the land price that favours capital accumulation. Two restrictions follow from our model : land insecurity has a negative effect on land price, and a positive effect on economic growth. These two restrictions are tested on panel data for the 27 Brazilian states. The econometric results do not reject our hypothesis.