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Land consolidation as technical change: Economic impacts in rural Vietnam

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  • Nguyen, Huy Quynh
  • Warr, Peter

Abstract

This paper deepens the economic analysis of the effects of land consolidation – reduction of land fragmentation. It does this in the context of rural Vietnam, studying whether land consolidation promotes or hinders the Vietnamese government’s policy objectives of encouraging agricultural mechanization and stimulating the off-farm rural economy. The analysis views land consolidation as a form of technical change, making it possible to apply the rich insights developed in the economic literature on that subject. This treatment reveals that the economic impacts of land consolidation depend partly on its factor bias and partly on the degree to which labor is substitutable in production for other factors. At a theoretical level, if a technical change is factor neutral, it will reduce off-farm labor supply and slow rural structural transformation away from agriculture; if it is labor-augmenting and the elasticity of substitution between factors is low enough, the opposite effects are predicted. The paper studies these issues empirically for rice production in Vietnam, focusing on the impact that consolidation of rice land has on rice production, machinery use, and labor allocation. The findings confirm that land consolidation raises both farm productivity and farm income and stimulates increased machinery use. It also reduces farm labor supply, lowers labor intensity in farming, and thereby releases more farm labor to off-farm development, consistent with government policy objectives. Based on these findings, the paper concludes that land consolidation should be encouraged through development of land ownership rights and the promotion of land rental markets.

Suggested Citation

  • Nguyen, Huy Quynh & Warr, Peter, 2020. "Land consolidation as technical change: Economic impacts in rural Vietnam," World Development, Elsevier, vol. 127(C).
  • Handle: RePEc:eee:wdevel:v:127:y:2020:i:c:s0305750x19303997
    DOI: 10.1016/j.worlddev.2019.104750
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    References listed on IDEAS

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    Cited by:

    1. Xin Deng & Zhongcheng Yan & Dingde Xu & Yanbin Qi, 2020. "Land Registration, Adjustment Experience, and Agricultural Machinery Adoption: Empirical Analysis from Rural China," Land, MDPI, Open Access Journal, vol. 9(3), pages 1-14, March.
    2. Guo, Beibei & Fang, Yelin & Jin, Xiaobin & zhou, Yinkang, 2020. "Monitoring the effects of land consolidation on the ecological environmental quality based on remote sensing: A case study of Chaohu Lake Basin, China," Land Use Policy, Elsevier, vol. 95(C).

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