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Land use restrictions, misallocation in agriculture, and aggregate productivity in Vietnam

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  • Le, Kien

Abstract

This paper evaluates the effects of restricted land use rights on aggregate productivity using micro-level data within a quantitative model. In particular, I exploit the Rice Land Designation Policy in Vietnam, which forces farmers to produce rice on almost 45% of land plots. I use digitized versions of Vietnam's Local Land Use Atlas and Global Agro-Ecological Zones database to construct a micro-spatial dataset that shapes the model features and allows me to compare the restricted against a counterfactual efficient allocation. The main findings suggest that eliminating all land use restrictions leads to an 8.03% increase in real GDP per capita. While misallocation in agriculture has been studied extensively, the paper highlights a novel source of misallocation also prevalent in other countries such as China, Myanmar, and Uzbekistan.

Suggested Citation

  • Le, Kien, 2020. "Land use restrictions, misallocation in agriculture, and aggregate productivity in Vietnam," Journal of Development Economics, Elsevier, vol. 145(C).
  • Handle: RePEc:eee:deveco:v:145:y:2020:i:c:s0304387820300407
    DOI: 10.1016/j.jdeveco.2020.102465
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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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