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Market reform, productivity and efficiency in Vietnamese rice production

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  • Tom Kompas

Abstract

This paper analyzes the dramatic increases in rice output and productivity in Vietnam due largely to market reform, inducing farmers to work harder and use land more efficiently. The reform process is captured through changes in effort variables and a decomposition of total factor productivity (TFP) due to enhanced incentives for two main reform periods: output contracts (1981-87) and trade liberalization (1988-94). The results show that the more extensive is market reform the larger the increase in TFP and the share of TFP growth due to incentive effects, suggesting that more competitive markets and secure property rights matter greatly. However, in the post-reform period (1995-99), the incentive component of TFP dissipates as a result of falls in the price of rice and slow increases in input prices, especially for hired labour, fertilizer and capital. A stochastic production frontier is estimated to determine what farm-specific factors limit efficiency gains. Results show that farms in the main rice growing regions, those with larger farm size and farms with a higher proportion of rice land ploughed by tractor are more efficient, suggesting the need for additional reforms to augment productvity. In particular, the requirement that rice be grown in every province in Vietnam, restrictions on farm size (especially in the north) and the slow development of rural credit markets for capital and land are seen to restrict the level and growth of efficiency substantially.

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File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC04-4.pdf
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Bibliographic Info

Paper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec04-4.

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Length: 34 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:idc:wpaper:idec04-4

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  1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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  8. Tuong Nhu Che & Tom Kompas & Neil Vousden, 2003. "Market Reform, Incentives and Development in Vietnamese Rice Production," International and Development Economics Working Papers idec03-7, International and Development Economics.
  9. Coelli, Tim J. & Battese, George E., 1996. "Identification Of Factors Which Influence The Technical Inefficiency Of Indian Farmers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(02), August.
  10. Nhu Che, Tuong & Kompas, Tom & Vousden, Neil, 2001. "Incentives and static and dynamic gains from market reform: rice production in Vietnam," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(4), December.
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Cited by:
  1. Tom Kompas & Tuong Nhu Che & Hoa Thi Minh Nguyen & Ha Quang Nguyen, 2012. "Productivity, Net Returns, and Efficiency: Land and Market Reform in Vietnamese Rice Production," Land Economics, University of Wisconsin Press, vol. 88(3), pages 478-495.
  2. Huynh Truong Huy, 2009. "Technical Efficiency of Rice-Producing Households in the Mekong Delta of Vietnam," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture, vol. 6(2), pages 35-50, December.
  3. Tan, Shuhao & Heerink, Nico & Kruseman, Gideon & Qu, Futian, 2008. "Do fragmented landholdings have higher production costs? Evidence from rice farmers in Northeastern Jiangxi province, P.R. China," China Economic Review, Elsevier, vol. 19(3), pages 347-358, September.
  4. Thang Nam Do, 2008. "Impact of Dykes on Wetland Values in Vietnam's Mekong River Delta: A Case Study in the Plain of Reeds," EEPSEA Research Report rr2008051, Economy and Environment Program for Southeast Asia (EEPSEA), revised May 2008.
  5. Phoupet Kyophilapong, 2009. "The Impact of Irrigation on Aquatic Wetland Resources - A Case Study of That Luang Marsh, Lao PDR," EEPSEA Research Report rr2009031, Economy and Environment Program for Southeast Asia (EEPSEA), revised Mar 2009.
  6. repec:ebl:ecbull:v:30:y:2010:i:1:p:461-471 is not listed on IDEAS
  7. Jude, Asiimwe. K., 2009. "Technical Efficiency Of Upland Rice Producers In South Western Uganda," Research Theses 117711, Collaborative Masters Program in Agricultural and Applied Economics.
  8. Nguyen, Huy, 2014. "The effect of land fragmentation on labor allocation and the economic diversity of farm households: The case of Vietnam," MPRA Paper 57521, University Library of Munich, Germany.

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