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Liberalisation, Incentives and Vietnamese Agricultural growth

Author

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  • Tuong Nhu Che
  • Tom Kompas
  • Neil Vousden

Abstract

This paper uses a dynamic model to analyse the effects of liberalisation on the longrun output and transitional growth of the Vietnamese rice sector during the period of reform from 1981 to the present. In particular, the paper attempts to allow for the incentive effects which can result if liberalisation induces individuals to work harder and use land more efficiently. Each new stage of liberalisation is shown to result in a higher steady-state level of physical capital and rice output. It is shown that, even with an assumed zero rate of growth in the ‘Solow residual’ component of total factor productivity, liberalisation may increase the long-run production of rice output by an order of two times its initial value. The analysis also predicts a significantly higher transitional growth rate of rice output for the more pervasive second stage of liberalisation than that for the first stage, suggesting that incentives and open markets matter greatly.

Suggested Citation

  • Tuong Nhu Che & Tom Kompas & Neil Vousden, 2002. "Liberalisation, Incentives and Vietnamese Agricultural growth," International and Development Economics Working Papers idec02-5, International and Development Economics.
    • Handle: RePEc:idc:wpaper:idec02-5
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    File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC02-5.pdf
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
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    3. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
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    5. McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
    6. Dwight H. Perkins, 1994. "Completing China's Move to the Market," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 23-46, Spring.
    7. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
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    10. Shoichi Ito & E. Wesley F. Peterson & Warren R. Grant, 1989. "Rice in Asia: Is It Becoming an Inferior Good?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 32-42.
    11. Perkins, Dwight Heald, 1988. "Reforming China's Economic System," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 601-645, June.
    12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Chen, T.N. & Kompas, T. & Vousden, N., 1999. "Incentives and Static and Dynamic Gains from Market Reform in an Emerging Profits Models," ANU Working Papers in Economics and Econometrics 1999-379, Australian National University, College of Business and Economics, School of Economics.
    2. 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), pages 1-26.
    3. Bachev, Hrabrin & Ivanov, Bojidar & Radev, Teodor & Dung, Nguen & Atanasova, Maria & Slavova, Yanka & Toteva, Dessislava, 2009. "Сравнителен Анализ На Аграрната Политика На България И Виетнам [Comparative Analysis of Agricultural Policy of Bulgaria and Vietnam]," MPRA Paper 99434, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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