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Political connections and investment in rural Vietnam

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  • Markussen, Thomas
  • Tarp, Finn

Abstract

This paper uses household panel data from rural Vietnam to explore the effects of having a relative in a position of political or bureaucratic power on farmers’ agricultural investment decisions. Our main result is that households significantly increase their investment in land improvement as a result of relatives moving into public office. Connections to office holders appear to be important for investment because they strengthen de-facto land property rights and improve access to offfarm employment and to informal loans. The findings underline the importance of informal networks for economic behaviour in environments with developing institutions and markets. They also suggest the presence of an untapped potential for economic development: if households without connections could obtain equally strong property rights and access to credit and insurance as the wellconnected households, investment levels would rise substantially.

Suggested Citation

  • Markussen, Thomas & Tarp, Finn, 2011. "Political connections and investment in rural Vietnam," 2011 ASAE 7th International Conference, October 13-15, Hanoi, Vietnam 291321, Asian Society of Agricultural Economists (ASAE).
    • Handle: RePEc:ags:asae11:291321
    DOI: 10.22004/ag.econ.291321
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    2. Das, Upasak, 2015. "Does Political Activism and Affiliation Affect Allocation of Benefits in the Rural Employment Guarantee Program: Evidence from West Bengal, India," World Development, Elsevier, vol. 67(C), pages 202-217.
    3. Kieu-Trang Nguyen & Quoc-Anh Do & Anh Tran, 2011. "One Mandarin Benefits the Whole Clan: Hometown Infrastructure and Nepotism in an Autocracy," Working Papers 18-2011, Singapore Management University, School of Economics.
    4. Hoang, Trung X. & Pham, Cong S. & Ulubaşoğlu, Mehmet A., 2014. "Non-Farm Activity, Household Expenditure, and Poverty Reduction in Rural Vietnam: 2002–2008," World Development, Elsevier, vol. 64(C), pages 554-568.

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