On the other hand, those who own land develop it, increasing the value of nearby land, providing employment, extracting natural resources, etc...

It's sort of a chicken/egg problem. Heritability of land ownership does lead to entrenched wealth with little incentive (or need) to further develop the land, but one could argue that many sorts of investments also fit the criterion of sometimes providing long term returns far in excess of what the original purchaser could have imagined or intended.