Market reforms and incentives in Vietnamese agriculture

Abstract

This paper analyzes the dramatic increases in rice output and productivity in Vietnam due largely to market reform, inducing farmers to work harder and use land more efficiently. The reform process is captured through changes in effort variables and total factor productivity (TFP) for Vietnam as a whole as well as the north and south regions of the country taken separately. The results show that the more extensive is market reform the larger the increase in TFP and the share of TFP growth due to incentive effects, suggesting that more competitive markets and secure property rights matter greatly.