IDEAS home Printed from https://ideas.repec.org/p/tvs/wpaper/wp-032.html
   My bibliography  Save this paper

Agricultural commercialization and asset growth for poverty reduction: Evidence from panel data for rural Vietnam

Author

Listed:
  • Oliver Schulte
  • Julian Mumber
  • Trung Thanh Nguyen

Abstract

Poverty remains a substantial threat in rural areas of many developing countries, and solving this problem requires an in-depth understanding of the income generating capacity that determines poverty. This paper examines the impact of agricultural commercialization on the capability of rural households to accumulate assets and on structural and multidimensional poverty. A longitudinal dataset of around 2000 households with a total of 9781 observations from five rural surveys undertaken in the period 2008 - 2017 in Vietnam is used. Results from a fixed effects regression with an instrumental variable and a control function approach show that agricultural commercialization has a positive effect on the accumulation of assets and reduces multidimensional and structural poverty over time. However, the effect is not homogeneous and larger for households not mainly engaged in rice commercialization. This suggests that commercialization can be a path out of poverty, especially if policy makers move towards utilizing other crops instead of rice.

Suggested Citation

  • Oliver Schulte & Julian Mumber & Trung Thanh Nguyen, 2023. "Agricultural commercialization and asset growth for poverty reduction: Evidence from panel data for rural Vietnam," TVSEP Working Papers wp-032, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    • Handle: RePEc:tvs:wpaper:wp-032
    as

    Download full text from publisher

    File URL: http://wp-tvsep.iuw.uni-hannover.de/RePEc/tvs/pdfbib/wp-032.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stuhler, Jan & Jaeger, David & Ruist, Joakim, 2018. "Shift-Share Instruments and the Impact of Immigration," CEPR Discussion Papers 12701, C.E.P.R. Discussion Papers.
    2. Huy, Hoang Trieu & Nguyen, Trung Thanh, 2019. "Cropland rental market and farm technical efficiency in rural Vietnam," Land Use Policy, Elsevier, vol. 81(C), pages 408-423.
    3. Oliver Schulte & Trung Thanh Nguyen & Ulrike Grote, 2022. "The Effect of Renting in Cropland on Livelihood Choices and Agricultural Commercialization: A Case Study from Rural Vietnam," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2878-2898, December.
    4. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    5. Christopher B. Barrett, 2005. "Rural poverty dynamics: development policy implications," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 45-60, January.
    6. Carter, Michael R. & May, Julian, 1999. "Poverty, livelihood and class in rural South Africa," World Development, Elsevier, vol. 27(1), pages 1-20, January.
    7. Carter, Michael R. & May, Julian, 2001. "One Kind of Freedom: Poverty Dynamics in Post-apartheid South Africa," World Development, Elsevier, vol. 29(12), pages 1987-2006, December.
    8. Ogutu, Sylvester Ochieng & Qaim, Matin, 2019. "Commercialization of the small farm sector and multidimensional poverty," World Development, Elsevier, vol. 114(C), pages 281-293.
    9. Alkire, Sabina & Foster, James, 2011. "Counting and multidimensional poverty measurement," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 476-487, August.
    10. Sylvester Ochieng Ogutu & Theda Gödecke & Matin Qaim, 2020. "Agricultural Commercialisation and Nutrition in Smallholder Farm Households," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 534-555, June.
    11. Govereh, Jones & Jayne, T. S., 2003. "Cash cropping and food crop productivity: synergies or trade-offs?," Agricultural Economics, Blackwell, vol. 28(1), pages 39-50, January.
    12. Ngoc-Ninh Ho & Truong Lam Do & Dinh-Thao Tran & Trung Thanh Nguyen, 2022. "Indigenous pig production and welfare of ultra-poor ethnic minority households in the Northern mountains of Vietnam," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(1), pages 156-179, January.
    13. Prasnee Tipraqsa & Pepijn Schreinemachers, 2009. "Agricultural commercialization of Karen Hill tribes in northern Thailand," Agricultural Economics, International Association of Agricultural Economists, vol. 40(1), pages 43-53, January.
    14. Dwayne Benjamin & Loren Brandt & Brian McCaig, 2017. "Growth with equity: income inequality in Vietnam, 2002–14," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 25-46, March.
    15. Proscovia Renzaho Ntakyo & Marrit Berg, 2019. "Effect of market production on rural household food consumption: evidence from Uganda," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(5), pages 1051-1070, October.
    16. Alkire, Sabina & Santos, Maria Emma, 2014. "Measuring Acute Poverty in the Developing World: Robustness and Scope of the Multidimensional Poverty Index," World Development, Elsevier, vol. 59(C), pages 251-274.
    17. François Fortier & Tran Thi Thu Trang, 2013. "Agricultural Modernization and Climate Change in Vietnam's Post-Socialist Transition," Development and Change, International Institute of Social Studies, vol. 44(1), pages 81-99, January.
    18. Badi Baltagi & Seuck Song, 2006. "Unbalanced panel data: A survey," Statistical Papers, Springer, vol. 47(4), pages 493-523, October.
    19. Amare, Mulubrhan & Mariara, Jane & Oostendorp, Remco & Pradhan, Menno, 2019. "The impact of smallholder farmers’ participation in avocado export markets on the labor market, farm yields, sales prices, and incomes in Kenya," Land Use Policy, Elsevier, vol. 88(C).
    20. Mulubrhan Amare & Lena Hohfeld, 2016. "Poverty Transition in Rural Vietnam: The Role of Migration and Remittances," Journal of Development Studies, Taylor & Francis Journals, vol. 52(10), pages 1463-1478, October.
    21. Robles Aguilar, Gisela & Sumner, Andy, 2020. "Who are the world’s poor? A new profile of global multidimensional poverty," World Development, Elsevier, vol. 126(C).
    22. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
    23. Carletto, Calogero & Corral, Paul & Guelfi, Anita, 2017. "Agricultural commercialization and nutrition revisited: Empirical evidence from three African countries," Food Policy, Elsevier, vol. 67(C), pages 106-118.
    24. Nguyen, Cuong, 2020. "Urban Poverty in Vietnam: Recent Evidences from Household Surveys," MPRA Paper 108972, University Library of Munich, Germany.
    25. Pingali, Prabhu L., 2001. "Environmental consequences of agricultural commercialization in Asia," Environment and Development Economics, Cambridge University Press, vol. 6(4), pages 483-502, October.
    26. Michelle Adato & Michael Carter & Julian May, 2006. "Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 226-247.
    27. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    28. Krishnan, Pramila & Patnam, Manasa, 2013. "Neighbours and Extension Agents in Ethiopia: Who matters more for technology diffusion?," CEPR Discussion Papers 9539, C.E.P.R. Discussion Papers.
    29. Buehler, Dorothee & Cunningham, Wendy, 2018. "Shocks, vulnerability and income generating capacity of rural households: Evidence from Southeast Asia," TVSEP Working Papers wp-010, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    30. Trung Thanh Nguyen & Viet Tuan Tran & Thanh-Tung Nguyen & Ulrike Grote, 2021. "Farming efficiency, cropland rental market and income effect: evidence from panel data for rural Central Vietnam," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(1), pages 207-248.
    31. Nguyen, Trung Thanh & Nguyen, Loc Duc & Lippe, Rattiya Suddeephong & Grote, Ulrike, 2017. "Determinants of Farmers’ Land Use Decision-Making: Comparative Evidence From Thailand and Vietnam," World Development, Elsevier, vol. 89(C), pages 199-213.
    32. Hoang, Viet-Ngu & Vu, Duc-Cuong, 2021. "On the effects of trade on multidimensional deprivation: Evidence from Vietnam’s rice growing households," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 476-485.
    33. Fischer, Elisabeth & Qaim, Matin, 2012. "Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya," World Development, Elsevier, vol. 40(6), pages 1255-1268.
    34. Cazzuffi, Chiara & McKay, Andy & Perge, Emilie, 2020. "The impact of agricultural commercialisation on household welfare in rural Vietnam," Food Policy, Elsevier, vol. 94(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schulte, Oliver & Mumber, Julian & Nguyen, Trung Thanh, 2023. "Agricultural commercialisation, asset growth and poverty in rural Vietnam," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(03), April.
    2. Amrita Saha & Rachel Sabates-Wheeler & John Thompson, 2022. "Insights into smallholder capacity for agricultural commercialisation: Evidence from four African contexts," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 1757-1802, August.
    3. Ogutu, Sylvester Ochieng & Qaim, Matin, 2019. "Commercialization of the small farm sector and multidimensional poverty," World Development, Elsevier, vol. 114(C), pages 281-293.
    4. Oliver Schulte & Trung Thanh Nguyen & Ulrike Grote, 2022. "The Effect of Renting in Cropland on Livelihood Choices and Agricultural Commercialization: A Case Study from Rural Vietnam," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2878-2898, December.
    5. Sylvester O. Ogutu & Matin Qaim, 2018. "Commercialization of the small farm sector and multidimensional poverty," GlobalFood Discussion Papers 269561, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    6. Buehler, Dorothee & Cunningham, Wendy, 2018. "Shocks, vulnerability and income generating capacity of rural households: Evidence from Southeast Asia," TVSEP Working Papers wp-010, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    7. Swati Dutta, 2015. "Identifying Single or Multiple Poverty Trap: An Application to Indian Household Panel Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 120(1), pages 157-179, January.
    8. Sylvester Ochieng Ogutu & Theda Gödecke & Matin Qaim, 2020. "Agricultural Commercialisation and Nutrition in Smallholder Farm Households," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 534-555, June.
    9. Radeny, Maren & van den Berg, Marrit & Schipper, Rob, 2012. "Rural Poverty Dynamics in Kenya: Structural Declines and Stochastic Escapes," World Development, Elsevier, vol. 40(8), pages 1577-1593.
    10. Cazzuffi, Chiara & McKay, Andy & Perge, Emilie, 2020. "The impact of agricultural commercialisation on household welfare in rural Vietnam," Food Policy, Elsevier, vol. 94(C).
    11. Lei Wang & Cong Li & Nong Zhu, 2024. "The effects of agricultural commercialization on the multidimensional poverty of rural households: Evidence from China," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(1), pages 626-643, January.
    12. Hirons, M. & Robinson, E. & McDermott, C. & Morel, A. & Asare, R. & Boyd, E. & Gonfa, T. & Gole, T.W. & Malhi, Y. & Mason, J. & Norris, K., 2018. "Understanding Poverty in Cash-crop Agro-forestry Systems: Evidence from Ghana and Ethiopia," Ecological Economics, Elsevier, vol. 154(C), pages 31-41.
    13. Janz, Teresa & Augsburg, Britta & Gassmann, Franziska & Nimeh, Zina, 2023. "Leaving no one behind: Urban poverty traps in Sub-Saharan Africa," World Development, Elsevier, vol. 172(C).
    14. Naschold, Felix, 2012. "“The Poor Stay Poor”: Household Asset Poverty Traps in Rural Semi-Arid India," World Development, Elsevier, vol. 40(10), pages 2033-2043.
    15. Herman Geyer, 2016. "Poverty Traps in South African Agriculture," Agrekon, Taylor & Francis Journals, vol. 55(4), pages 356-376, October.
    16. Guyo Godana Dureti & Martin Paul Jr. Tabe‐Ojong & Enoch Owusu‐Sekyere, 2023. "The new normal? Cluster farming and smallholder commercialization in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 900-920, November.
    17. Aguero, Jorge M. & Carter, Michael R. & May, Julian, 2006. "Poverty and Inequality in the First Decade of South Africa's Democracy: What Can be Learned from Panel Data?," Staff Papers 12621, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    18. Barrett, Christopher B. & Swallow, Brent M., 2006. "Fractal poverty traps," World Development, Elsevier, vol. 34(1), pages 1-15, January.
    19. Dylan Fitz & Shyam Gouri Suresh, 2021. "Poverty traps across levels of aggregation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 16(4), pages 909-953, October.
    20. Simone Schotte, 2019. "Structural poverty dynamics in urban South Africa: A mixed-methods investigation," WIDER Working Paper Series wp-2019-100, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Asset growth; Asset-based income; Commercialization; Fixed effects; Instrumental variable; Control function;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tvs:wpaper:wp-032. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nguyen, Trung Thanh (email available below). General contact details of provider: https://edirc.repec.org/data/iuhande.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.