Economic impacts of political ties in Vietnam: evidence from Northern rural households

This paper focuses on investigating the impacts of political connections on household income and agricultural investments in mountainous areas of Vietnam by employing several matching methodologies. Propensity score matching is an increasingly well-known approach for evaluation studies in agricultural economics. Additionally, this study attempted to verify the significance of political connections in rural economics. To conduct the empirical approach, we used survey data of 550 households from three provinces in Northern Vietnam. The findings indicate that political connections have significantly positive impacts on the total income of households and farming behavior, but significantly negative impacts on agricultural investments of the households. Differences between the income of household connected and not were connected group of households is estimated at approximately 30 million VND (US$ 1304) per year. However, the total income of the connected households was not heavily based on agricultural production, non-agricultural activities accounted for a larger share of the total income. Another important outcome confirmed the privileges of politically connected households in terms of receiving extension courses substantially increased the inequality between rural households in the survey areas because the distribution of government subsidies was distorted to target the necessities.