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Efficiency And Equity Impacts Of The Rental Market For Cropland In Vietnam And Sources Of Transaction Costs Impeding The Market

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  • Huy, Hoang
  • Lyne, Michael
  • Ratna, Nazmun
  • Nuthall, Peter

Abstract

This research investigates the efficiency and equity impacts of the cropland rental market in rural Vietnam and attempts to identify the determinants and importance of transaction costs impeding this market. A generalised ordered logit model with shifting thresholds accounting for effects of transaction costs associated with market participation was specified and estimated using pooled data extracted from the Vietnam Household Living Standards Surveys of 2004 and 2008. The findings show that the cropland rental market reduced imbalances in factor endowments, transferring cropland to those households more willing and able to farm. Equity advantages were also revealed as cropland transferred from relatively land-rich to relatively land-poor households, allowing young farmers to ‘scale the agricultural ladder’. However, the market is constrained by transaction costs that effect lessors and lessees differently. It is recommended that the Vietnamese government should complete its land registration programme and consider relaxing restrictions on the use of wetlands to grow crops other than rice. It should also focus on improving access to all-weather roads as this encourages participation on both sides of the rental market whereas better access to communications infrastructure was found to promote only the supply side.

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Bibliographic Info

Paper provided by New Zealand Agricultural and Resource Economics Society in its series 2013 Conference, August 28-30, 2013, Christchurch, New Zealand with number 160264.

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Date of creation: Aug 2013
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Handle: RePEc:ags:nzar13:160264

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Web page: http://www.nzares.org.nz/
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Related research

Keywords: Vietnam; 2003 land law; rental market; transaction costs; Agribusiness; Agricultural and Food Policy; Agricultural Finance; Community/Rural/Urban Development; Crop Production/Industries; Demand and Price Analysis; Environmental Economics and Policy; Farm Management; Food Consumption/Nutrition/Food Safety; Food Security and Poverty; Land Economics/Use; Production Economics; Productivity Analysis;

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  1. Van Hung, Pham & MacAulay, T. Gordon & Marsh, Sally P., 2007. "The economics of land fragmentation in the north of Vietnam," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), June.
  2. Vranken, Liesbet & Swinnen, Johan, 2006. "Land rental markets in transition: Theory and evidence from Hungary," World Development, Elsevier, vol. 34(3), pages 481-500, March.
  3. Timothy Crookes & Michael Lyne, 2003. "Efficiency and equity gains in the rental market for arable land: observations from a communal area of KwaZulu-Natal, South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 20(5), pages 579-593.
  4. Deininger, Klaus W. & Jin, Songqing, 2005. "Land Sales and Rental Markets in Transition: Evidence from Rural Vietnam," 2005 Annual meeting, July 24-27, Providence, RI 19359, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Jin, Songqing & Deininger, Klaus, 2009. "Land rental markets in the process of rural structural transformation: Productivity and equity impacts from China," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 629-646, December.
  6. Thomas Markussen & Finn Tarp & Katleen Van den Broeck, 2009. "The Forgotten Property Rights: Restrictions on Land Use in Vietnam," Discussion Papers 09-21, University of Copenhagen. Department of Economics.
  7. World Bank, 2009. "World Development Indicators 2009," World Bank Publications, The World Bank, number 4367, October.
  8. Stein Holden & Klaus Deininger & Hosaena Ghebru, 2011. "Tenure Insecurity, Gender, Low-cost Land Certification and Land Rental Market Participation in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 31-47.
  9. Rios, Ana R. & Shively, Gerald E., 2005. "Farm size and nonparametric efficiency measurements for coffee farms in Vietnam," 2005 Annual meeting, July 24-27, Providence, RI 19159, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Ravallion, Martin & Van der Walle, Dominique, 2003. "Land allocation in Vietnam's agrarian transition," Policy Research Working Paper Series 2951, The World Bank.
  11. Richard Williams, 2006. "Generalized ordered logit/partial proportional odds models for ordinal dependent variables," Stata Journal, StataCorp LP, vol. 6(1), pages 58-82, March.
  12. Deininger, Klaus & Jin, Songqing, 2005. "The potential of land rental markets in the process of economic development: Evidence from China," Journal of Development Economics, Elsevier, vol. 78(1), pages 241-270, October.
  13. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
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