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Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam

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  • Le, Kien
Abstract
We evaluate the effects of restricted land use rights on aggregate productivity using micro-level data within a quantitative model. In particular, we exploit the Rice Land Designation Policy in Vietnam, which forces farmers to produce rice on almost 45% of plots of land. The policy provides a natural setting for investigating the aggregate effects of land use misallocation. We quantify the impacts of this system by formulating a two-sector model featuring production and occupation choices. We also use digitized versions of Vietnam’s Local Land Use Atlas and Global Agro-Ecological Zones database to construct a micro-spatial dataset that shapes important features of the model and allows us to compare the restricted against a counterfactual efficient allocation. The main findings suggest that eliminating all land use restrictions leads to 10.6% gain in agricultural total factor productivity and 4.36% increase in real GDP per capita. While misallocation in agriculture has been studied extensively, our research highlights a novel source of misallocation that is prevalent in other countries such as China, Myanmar, Uzbekistan, among others.

Suggested Citation

  • Le, Kien, 2018. "Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam," MPRA Paper 90797, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90797
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    3. Kien Le & My Nguyen, 2022. "The impacts of rainfall shocks on birth weight in Vietnam," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 14(2), pages 143-159, April.
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    6. Kumari, Ranpati Dewage Thilini Sumudu & Chen, Shawn Xiaoguang & Li, Bei & Tang, Sam Hak Kan, 2023. "Can land misallocation be a greater barrier to development than capital? Evidence from manufacturing firms in Sri Lanka," Economic Modelling, Elsevier, vol. 126(C).
    7. Trinh, Tra Thi & Munro, Alistair, 2024. "Climate change and migration decisions: A choice experiment from the Mekong Delta, Vietnam," Ecological Economics, Elsevier, vol. 224(C).
    8. Hongyun Zheng & Wanglin Ma, 2021. "The role of resource reallocation in promoting total factor productivity growth: Insights from China’s agricultural sector," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2350-2371, November.
    9. Nguyen, My, 2019. "Political Violence and Child Height: Evidence from the 2003 Casablanca Bombings," MPRA Paper 111205, University Library of Munich, Germany.
    10. Marijn A. Bolhuis & Swapnika R. Rachapalli & Diego Restuccia, 2021. "Misallocation in Indian Agriculture," NBER Working Papers 29363, National Bureau of Economic Research, Inc.
    11. Le Kien & Nguyen My, 2021. "How Education Empowers Women in Developing Countries," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(2), pages 511-536, April.
    12. Xu Dong & Yali Yang & Qinqin Zhuang & Weili Xie & Xiaomeng Zhao, 2022. "Does Environmental Regulation Help Mitigate Factor Misallocation?—Theoretical Simulations Based on a Dynamic General Equilibrium Model and the Perspective of TFP," IJERPH, MDPI, vol. 19(6), pages 1-21, March.
    13. Nguyen, My, 2020. "Mask Mandates and COVID-19 Related Symptoms in the US," MPRA Paper 109992, University Library of Munich, Germany.
    14. Chen, Minjie & Heerink, Nico & Zhu, Xueqin & Feng, Shuyi, 2021. "Do Small Farm Sizes Imply Large Resource Misallocation? Evidence from Wheat-Maize Double Cropping Farms in the North China Plain," 2021 Conference, August 17-31, 2021, Virtual 315141, International Association of Agricultural Economists.
    15. Congguo Zhang & Di Yao & Yanlin Zhen & Weiwei Li & Kerun Li, 2022. "Mismatched Relationship between Urban Industrial Land Consumption and Growth of Manufacturing: Evidence from the Yangtze River Delta," Land, MDPI, vol. 11(9), pages 1-35, August.
    16. Le, Kien & Nguyen, My, 2020. "The Impacts of Temperature Shocks on Birth Weight in Vietnam," MPRA Paper 110325, University Library of Munich, Germany.
    17. Pengfei Ge & Tan Liu & Xiaoxu Wu & Xiulu Huang, 2023. "Heterogenous Urbanization and Agricultural Green Development Efficiency: Evidence from China," Sustainability, MDPI, vol. 15(7), pages 1-22, March.
    18. Jianxu Liu & Mengjiao Wang & Li Yang & Sanzidur Rahman & Songsak Sriboonchitta, 2020. "Agricultural Productivity Growth and Its Determinants in South and Southeast Asian Countries," Sustainability, MDPI, vol. 12(12), pages 1-21, June.
    19. Xie, Rui & Yao, Siling & Han, Feng & Zhang, Qi, 2022. "Does misallocation of land resources reduce urban green total factor productivity? An analysis of city-level panel data in China," Land Use Policy, Elsevier, vol. 122(C).
    20. Gao, Feng & Lin, Yijie & Zhang, Xuanming & Li, Shanhong & Lv, Yanqin, 2023. "Interconnectedness between land resource misallocation and environmental pollution: Exploring the sustainable development potential in China," Resources Policy, Elsevier, vol. 86(PB).
    21. Le, Kien & Nguyen, My, 2020. "The Impacts of Armed Conflict on Child Health: Evidence from 56 Developing Countries," MPRA Paper 109896, University Library of Munich, Germany.
    22. Rivera-Padilla, Alberto, 2020. "Crop choice, trade costs, and agricultural productivity," Journal of Development Economics, Elsevier, vol. 146(C).
    23. Groeger, Andre & Zylberberg, Yanos, 2024. "The pick of the crop: agricultural practices and clustered networks in village economies," CEPR Discussion Papers 18804, C.E.P.R. Discussion Papers.
    24. Chen, Minjie & Heerink, Nico & Zhu, Xueqin & Feng, Shuyi, 2022. "Do small and equally distributed farm sizes imply large resource misallocation? Evidence from wheat-maize double-cropping in the North China Plain," Food Policy, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    Agriculture; misallocation; land use restrictions; aggregate productivity; Vietnam;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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