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Land consolidation as technical change: Economic impacts in rural Vietnam

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  • Nguyen, Huy Quynh
  • Warr, Peter

Abstract

This paper deepens the economic analysis of the effects of land consolidation – reduction of land fragmentation. It does this in the context of rural Vietnam, studying whether land consolidation promotes or hinders the Vietnamese government’s policy objectives of encouraging agricultural mechanization and stimulating the off-farm rural economy. The analysis views land consolidation as a form of technical change, making it possible to apply the rich insights developed in the economic literature on that subject. This treatment reveals that the economic 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.

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  • Nguyen, Huy Quynh & Warr, Peter, 2020. "Land consolidation as technical change: Economic impacts in rural Vietnam," World Development, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:wdevel:v:127:y:2020:i:c:s0305750x19303997
    DOI: 10.1016/j.worlddev.2019.104750
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    9. Manh Hung Do & Trung Thanh Nguyen & Ulrike Grote, 2022. "Is land consolidation policy a solution for rice production and agricultural transformation in Vietnam?," TVSEP Working Papers wp-028, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
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    15. Keijiro Otsuka, 2021. "Changing Relationship between Farm Size and Productivity and Its Implications for Philippine Agriculture," Discussion Papers 2102, Graduate School of Economics, Kobe University.
    16. Phuc Van Phan & Martin O'Brien, 2022. "Is small beautiful? An empirical analysis of land characteristics and rural household income in Vietnam," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(3), pages 561-580, July.
    17. Nhung Pham Thi & Martin Kappas & Heiko Faust, 2021. "Impacts of Agricultural Land Acquisition for Urbanization on Agricultural Activities of Affected Households: A Case Study in Huong Thuy Town, Thua Thien Hue Province, Vietnam," Sustainability, MDPI, vol. 13(15), pages 1-20, July.
    18. Yaoben Lin & Danling Chen, 2022. "Functional Zoning and Path Selection of Land Comprehensive Consolidation Based on Grey Constellation Clustering: A Case Study of Dongying City, China," IJERPH, MDPI, vol. 19(11), pages 1-16, May.
    19. Qiqi Yin & Shenglu Zhou & Chengxiang Lv & Yang Zhang & Xueyan Sui & Xiaorui Wang, 2022. "Comprehensive Land Consolidation as a Tool to Promote Rural Restructuring in China: Theoretical Framework and Case Study," Land, MDPI, vol. 11(11), pages 1-17, October.
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    22. Walter Timo de Vries, 2022. "Social Aspects in Land Consolidation Processes," Land, MDPI, vol. 11(3), pages 1-13, March.
    23. Peter Warr & Waleerat Suphannachart, 2021. "Agricultural Productivity Growth and Poverty Reduction: Evidence from Thailand," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 525-546, June.
    24. Zheng, Hongyun & Ma, Wanglin & Zhou, Xiaoshi, 2021. "Effects of Renting-in Cropland on Machinery Use Intensity and Land Productivity: Evidence from Rural China," 2021 Conference, August 17-31, 2021, Virtual 315084, International Association of Agricultural Economists.
    25. Guo, Beibei & Fang, Yelin & Jin, Xiaobin & zhou, Yinkang, 2020. "Monitoring the effects of land consolidation on the ecological environmental quality based on remote sensing: A case study of Chaohu Lake Basin, China," Land Use Policy, Elsevier, vol. 95(C).

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