IDEAS home Printed from https://ideas.repec.org/p/pas/papers/2018-25.html
   My bibliography  Save this paper

Land consolidation as technical change: impacts on-farm and off-farm in rural Vietnam

Author

Listed:
  • Huy Quynh Nguyen
  • Peter Warr

Abstract

This paper studies whether land consolidation – reduction of land fragmentation – promotes or hinders the Vietnamese government’s policy objectives of encouraging agricultural mechanization and stimulation of the off-farm rural economy. It does this by viewing land consolidation as a form of technical change, making it possible to apply the insights developed in the economic literature on technical change. This treatment reveals that the 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

  • Huy Quynh Nguyen & Peter Warr, 2018. "Land consolidation as technical change: impacts on-farm and off-farm in rural Vietnam," Departmental Working Papers 2018-25, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2018-25
    as

    Download full text from publisher

    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/crawford01_cap_anu_edu_au/2018-11/final_2018_-_25.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Blarel, Benoit, et al, 1992. "The Economics of Farm Fragmentation: Evidence from Ghana and Rwanda," World Bank Economic Review, World Bank Group, vol. 6(2), pages 233-254, May.
    2. Lili Jia & Martin Petrick, 2014. "How does land fragmentation affect off-farm labor supply: panel data evidence from China," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 369-380, May.
    3. 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.
    4. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
    5. Nicholas Minot & Francesco Goletti, 1998. "Export Liberalization and Household Welfare: The Case of Rice in Vietnam," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 738-749.
    6. Rahman, Sanzidur, 2009. "Whether crop diversification is a desired strategy for agricultural growth in Bangladesh?," Food Policy, Elsevier, vol. 34(4), pages 340-349, August.
    7. Keijiro Otsuka & Yanyan Liu & Futoshi Yamauchi, 2013. "Factor Endowments, Wage Growth, and Changing Food Self-Sufficiency: Evidence from Country-Level Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1252-1258.
    8. Guang Wan & Enjiang Cheng, 2001. "Effects of land fragmentation and returns to scale in the Chinese farming sector," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 183-194.
    9. Kien T. Le, 2010. "Separation Hypothesis Tests in the Agricultural Household Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1420-1431.
    10. Matshe, Innocent & Young, Trevor, 2004. "Off-farm labour allocation decisions in small-scale rural households in Zimbabwe," Agricultural Economics, Blackwell, vol. 30(3), pages 175-186, May.
    11. Pham Van Hung & T. Gordon MacAulay & Sally P. Marsh, 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), pages 195-211, June.
    12. Patrick Hitayezu & Julius Juma Okello & Christopher Obel-Gor, 2014. "Farm households' participation in rural non-farm employment in post-war Rwanda: Drivers and policy implications," Development Southern Africa, Taylor & Francis Journals, vol. 31(3), pages 452-474, May.
    13. C. Peter Timmer, 2014. "Food Security in Asia and the Pacific: The Rapidly Changing Role of Rice," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(1), pages 73-90, January.
    14. 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.
    15. 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), pages 1-17.
    16. Martin Ravallion & Dominique van de Walle, 2008. "Land in Transition : Reform and Poverty in Rural Vietnam," World Bank Publications, The World Bank, number 6433, Juni.
    17. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    18. Nguyen, Huy Quynh, 2017. "Analyzing the economies of crop diversification in rural Vietnam using an input distance function," Agricultural Systems, Elsevier, vol. 153(C), pages 148-156.
    19. Dominique Van De Walle & Dorothyjean Cratty, 2004. "Is the emerging non‐farm market economy the route out of poverty in Vietnam?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(2), pages 237-274, June.
    20. Marsh, Sally P. & MacAulay, T. Gordon & Van Hung, Pham (ed.), 2006. "Agricultural Development and Land Policy in Vietnam," Monographs, Australian Centre for International Agricultural Research, number 114071, Autumn.
    21. Benedito Cunguara & Augustine Langyintuo & Ika Darnhofer, 2011. "The role of nonfarm income in coping with the effects of drought in southern Mozambique," Agricultural Economics, International Association of Agricultural Economists, vol. 42(6), pages 701-713, November.
    22. Jolliffe, Dean, 2004. "The impact of education in rural Ghana: examining household labor allocation and returns on and off the farm," Journal of Development Economics, Elsevier, vol. 73(1), pages 287-314, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Land consolidation; factor-biased technical change; rural diversification; machinery use;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pas:papers:2018-25. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prema-chandra Athukorala). General contact details of provider: http://edirc.repec.org/data/asanuau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.