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Political Connections and Investment in Rural Vietnam

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Author Info

  • Finn Tarp
  • Thomas Markussen

Abstract

This paper uses household panel data from rural Vietnam to explore the effects of having a relative in a position of political or bureaucratic power on farmers. agricultural investment decisions. Our main result is that households significantly increase their investment in land improvement as a result of relatives moving into public office. Connections to office holders appear to be important for investment because they strengthen de facto land property rights and improve access to off-farm employment and to informal loans. The findings underline the importance of informal networks for economic behaviour in environments with developing institutions and markets. They also suggest the presence of an untapped potential for economic development: if households without connections could obtain equally strong property rights and accessto credit and insurance as the well-connected households, investment levels would risesubstantially.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2011/wp2011-037.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Working Paper WP2011/037.

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Length: 26 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:unu:wpaper:wp2011-037

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Related research

Keywords: political connections; informal networks; land property rights; investment; credit; Vietnam;

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References

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  1. MICHAEL R. CARTER & Pedro Olinto, 2000. "Getting Institutions 'Right' for Whom: Credit Constraints and the Impact of Property Rights on the Quantity and Compostiton of Investment," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 433, Wisconsin-Madison Agricultural and Applied Economics Department.
  2. Martin Ravallion & Dominique van de Walle, 2004. "Breaking up the collective farms," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(2), pages 201-236, 06.
  3. Martin Ravallion & Dominique van de Walle, 2006. "Land Reallocation in an Agrarian Transition," Economic Journal, Royal Economic Society, vol. 116(514), pages 924-942, October.
  4. Richard Hornbeck, 2010. "Barbed Wire: Property Rights and Agricultural Development," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 767-810, May.
  5. Quy-Toan Do & Lakshmi Iyer, 2008. "Land Titling and Rural Transition in Vietnam," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 531-579.
  6. Brasselle, Anne-Sophie & Gaspart, Frederic & Platteau, Jean-Philippe, 2002. "Land tenure security and investment incentives: puzzling evidence from Burkina Faso," Journal of Development Economics, Elsevier, vol. 67(2), pages 373-418, April.
  7. Ravallion, Martin & van de Walle, Dominique, 2008. "Does rising landlessness signal success or failure for Vietnam's agrarian transition?," Journal of Development Economics, Elsevier, vol. 87(2), pages 191-209, October.
  8. Lee J. Alston & Gary D. Libecap & Robert Schneider, 1996. "The Determinants and Impact of Property Rights: Land Titles on the Brazilian Frontier," NBER Working Papers 5405, National Bureau of Economic Research, Inc.
  9. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, June.
  10. Markus Goldstein & Christopher Udry, 2005. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Working Papers 929, Economic Growth Center, Yale University.
  11. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Connections and Incentives in the Workplace: Evidence from Personnel Data," CEPR Discussion Papers 7114, C.E.P.R. Discussion Papers.
  12. Ferraz, Claudio & Finan, Frederico S., 2007. "Exposing Corrupt Politicians: The Effects of Brazil’s Publicly Released Audits on Electoral Outcomes," IZA Discussion Papers 2836, Institute for the Study of Labor (IZA).
  13. Markussen, Thomas & Tarp, Finn & Van Den Broeck, Katleen, 2011. "The Forgotten Property Rights: Evidence on Land Use Rights in Vietnam," World Development, Elsevier, vol. 39(5), pages 839-850, May.
  14. Hanan G. Jacoby & Ghazala Mansuri, 2008. "Land Tenancy and Non-Contractible Investment in Rural Pakistan," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 763-788.
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Cited by:
  1. Kieu-Trang Nguyen & Quoc-Anh Do & Anh Tran, 2012. "One Mandarin Benefits the Whole Clan: Hometown Infrastructure and Nepotism in an Autocracy," Working Papers 07-2012, Singapore Management University, School of Economics.
  2. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2013. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," Sciences Po publications 13, Sciences Po.

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