Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Agricultural Investment and Structural Change: Evidence from Rural Vietnam

44 views

Published on

Trung Thanh Nguyen, Truong Lam Do, Ulrike Grote; Institute for Environmental Economics & World Trade, Leibniz Universitat Hannover

Presented at the ReSAKSS-Asia conference “Agriculture and Rural Transformation in Asia: Past Experiences and Future Opportunities”. An international conference jointly organized by ReSAKSS-Asia, IFPRI, TDRI, and TVSEP project of Leibniz Universit Hannover with support from USAID and Deutsche Forschungsgemeinschaft (DFG) at the Dusit Thani Hotel, Bangkok, Thailand December 12–14, 2017.

Published in: Economy & Finance
  • Be the first to comment

  • Be the first to like this

Agricultural Investment and Structural Change: Evidence from Rural Vietnam

  1. 1. Institute for Environmental Economics & World Trade Trung Thanh Nguyen, Truong Lam Do, Ulrike Grote Agricultural Investment and Structural Change: Evidence from Rural Vietnam ReSAKSS – Asia Conference Bangkok, 12-14.12.2017
  2. 2. 2 Outline ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017  Introduction  Research Questions  Data & Methods  Main Findings  Summary & Implications
  3. 3. 3 Introduction  Structural change as part of economic growth & key role of agriculture (Lewis, 1955, Johnston & Mellor, 1961)  Patterns of structural change  Most studies use country level macro data (Gollin et al., 2005; Michaels et al., 2012)  An improved understanding at the household level needed! ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  4. 4. 4  Rapid economic growth & structural change  Annual GDP growth 7.2% from 2002-2012 (Berliner et al., 2013)  Agricultural GDP & poverty decline, income inequality increases (World Bank, 2015)  Livestock production has been developing  By 8 mill. HHs, contribute 27% to agricultural GDP & 4% to GDP (Stanton et al., 2011)  Expected 42% to agricultural GDP by 2020 & 5% annual growth (Do et al., 2017) Introduction: Vietnam ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  5. 5. 5 Research objectives  To investigate the relationship between agricultural investment & structural change at the farm level in Central Vietnam  To examine the impact, e.g. livestock production, on poverty & income equality ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  6. 6. 6 Key indicators  Agricultural investment: agricultural investment/ha during the last three years  Structural change: farm labour share, farmland size  Poverty: Foster, Greer, and Thorbecke poverty indices (headcount, gap, & severity)  Income equality: Lorenz curves & Gini coefficients ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  7. 7. 7 Data  TVSEP project  3 provinces  About 2200 households  Five waves (2007, 2008, 2010, 2013, 2016) ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  8. 8. 8 Method(1): Econometric regression Asset (t-2) Ag. investment (t-2) Farm yield (t-1) Farm labor (t) Machinery expenditure (t) Farmland size (t)  We also control for other household & farm characteristics, village conditions, income shocks, & annual rainfall ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  9. 9. 9 Method(2): Combined PSM with DID (M-DID)  We combine with-without with before-after ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  10. 10. 10 Result(1): Changes in farm size & no. of farms Year Farmland size (ha) No. of farm 2007 0.87 2181 2008 0.90 2141 2010 0.95 2097 2013 0.98 1998 2016 1.07 1830 Source: based on TVSEP data of the 3 provinces, total no. of 2200 ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  11. 11. 11 Result(2): Other changes 66.6% 55.1%55.4% 40.9% 46.5% 41.8% 16.6% 39.2% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 2007 2008 2010 2013 2016 Year Farm labor share Farm investment share Farm income share Livestock income share ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  12. 12. 12 Result(3): Determinants of structural change  Positive effect of agricultural investment on crop yield  A higher crop yield leads to a lower farm labour share, but a higher machinery expenditure & a larger farmland size  That is similar with education level of the heads, irrigation, & non-farm employment  Income shocks reduces agricultural investment & crop yield  Livestock increases agricultural investment & crop yield ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  13. 13. 13 Poverty index Having livestock (1) Giving up livestock (2) Whole sub- sample Shock households Whole sub- sample Shock households Head count (P0) -0.037 -0.013 0.200*** 0.173*** Poverty gap (P1) -0.049** -0.064** 0.153*** 0.167*** Poverty severity (P2) -0.040** -0.057** 0.134** 0.167** (1): Consumption poverty line at 1.25 $PPP, (2): Income poverty line at 2 $PPP, *, **, *** significant at 10%, 5%, and 1%, respectively, Radius matching with common support and band width 0.06. Result(4): Impact livestock on poverty reduction  Positive effect of having livestock on poverty reduction  Negative effect of giving up livestock on poverty reduction  These are more important for households with income shocks ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  14. 14. 14 0 102030405060708090 100 Cumulativeincomeshare 0 10 20 30 40 50 60 70 80 90 100 Cumulative population share HH income with livestock income HH income without livestock income HH income with positive livestock income Equality Result(5): Impact livestock on income inequality  Livestock diseases lead to negative livestock income & insignificant effect on income inequality reduction  Positive livestock income reduces income inequality by 4% ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  15. 15. 15 Summary  Clear sign of structural change at the farm level  Effects of agricultural investment on crop yield, farm labour share, & farmland size  Larger farmers with livestock invest more in farming  Shocks impact on agricultural investment, crop yield & constraint structural change  Livestock contribute to reducing poverty & income inequality, but  Livestock diseases reduce this positive effect ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  16. 16. 16 Implications  Promotion of agricultural investment through livestock rearing & farm land accumulation  Development of rural infrastructure & non-farm employment  Safety programs to cope with income shocks  Extension services for livestock diseases ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  17. 17. 17 Publications ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  18. 18. 18 Publications ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  19. 19. 19 THANK YOU ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  20. 20. 20 Change in labor share 66.6% 63.8% 59.5% 56.5% 55.1% 33.4% 36.2% 40.5% 43.5% 44.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2010 2013 2016 Year Farm labor share Non farm labor share ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  21. 21. 21 Change in Investment share 55.4% 56.9% 48.2% 43.8% 40.9% 44.6% 43.1% 51.8% 56.2% 59.1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2010 2013 2016 Year Farm investment share Non farm investment share ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  22. 22. 22 Change in income share 46.5% 65.1% 42.3% 41.8% 53.5% 34.9% 57.7% 58.2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2010 2013 Year Farm income share Non farm income share ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  23. 23. 23 Change in farm income share 16.6% 23.1% 31.6% 39.2% 83.4% 76.9% 68.4% 60.8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2007 2008 2010 2013 Year Livestock income share Crop income share ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  24. 24. 24 Determinants of agricultural investment Dependent variable: farm investments (log) in PPP$ Random Effects Fixed Effects Coef. RSE Coef. RSE Land rice size (log) 0.572*** 0.039 0.553*** 0.060 Having demography shock -0.140* 0.079 -0.153* 0.083 Having livestock 0.190*** 0.072 0.064 0.081 Having irrigation 0.003 0.133 0.451*** 0.135 Having non-farm job -0.355*** 0.107 -0.219** 0.111 HH age -0.019*** 0.003 -0.034*** 0.008 HH size 0.129*** 0.029 0.151*** 0.040 Assets (log) 0.132*** 0.034 0.127*** 0.043 No. time credit reject 0.106* 0.064 0.064 0.050 Observations 10280 10280 F/Chi2 651.69 16.005 Prob. > F 0.0000 0.0000 R-sq. overall 0.124 0.115 ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  25. 25. 25 Determinants of rice yield Dependent variable: Rice yield (log) (in ton/ha) Random Effects Fixed Effects Coef. RSE Coef. RSE Land rice size (log) -0.144*** 0.025 -0.334*** 0.027 Having agricultural shock -0.103*** 0.021 -0.071*** 0.020 Having irrigation 0.102*** 0.025 0.030 0.027 Fertilizer per ha 0.053*** 0.008 0.030*** 0.009 Machine per ha 0.025*** 0.005 0.012*** 0.004 Having non-farm job -0.053** 0.026 -0.029 0.028 Gender (female = 1) -0.141*** 0.040 -0.178** 0.088 HH size 0.088*** 0.030 0.052 0.044 Annual Rainfall (in mm/ha) 0.026*** 0.005 0.032*** 0.005 Observations 6727 6727 F/Chi2 382.300 35.389 Prob. > F 0.0000 0.0000 R-sq. overall 0.097 0.023 ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  26. 26. 26 Result(3): Determinants of structural change A. investment (ln) (PPP$) (t-2) Rice Yield (ln) (ton/ha) (t-1) Farm Labor Share (%) (t) Machine/ ha (ln) (PPP$) (t) Rice Area (ln) ( ha) (t) Assets (ln) (PPP$) (t-2) 0.382*** A. investments (ln) (PPP$) (t-2) 0.266*** Rice yield (ln) (ton/ha) (t-1) -4.652*** 4.040*** 0.331*** Having demographic shock (yes = 1) 0.414 -0.235* -0.049* Having irrigation (yes = 1) -3.107*** 1.288*** 0.397*** Having non-farm job (yes = 1) -40.600*** 0.748*** 0.012 Education of HH -0.220*** 0.058*** 0.003 Having livestock (yes = 1) 2.893*** -0.300** 0.176*** *, **, *** significant at 10%, 5%, and 1%, respectively, other factors not presented ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  27. 27. 27 Impact livestock on poverty reduction Poverty indexes Having livestock Giving up livestock KBM Radius KBM Radius Head count (P0) -0.006 -0.007 0.098** 0.104** Poverty gap (P1) -0.041 -0.039 0.047*** 0.050*** Poverty severity (P2) -0.043** -0.041** 0.025** 0.026** Poverty line is 2 $PPP, *, **, *** significant at 10%, 5%, and 1%, respectively. Standard errors bootstrapped 1,000 replications KBM = Kernel matching with common support and band width 0.06, Radius matching with common support and band width 0.06. ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  28. 28. 28 Mean Rice Yields over the years 0 1000 2000 3000 4000 5000 6000 2007 2008 2010 2013 2016 Kg/ha Year Rice Yields over the years Rice Yield ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  29. 29. 29 Mean Rice Yields against Lagged Investments 0 1000 2000 3000 4000 5000 6000 0 200 400 600 800 1000 1200 1400 1600 1800 2008 2010 2013 2016 RiceYields(kg/ha) Investments$PPP/ha(t-1) Year Lagged investment Rice Yield ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  30. 30. 30 Lagged Investments and structural change 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 0 200 400 600 800 1000 1200 1400 1600 1800 2008 2010 2013 2016 RiceYields(kg/ha) Investments$PPP/ha(t-1) Year Lagged investment Agri Labour share Off-farm labour share Machine Expenses ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  31. 31. 31 Structural Change in Vietnam ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
  32. 32. 32Energy Economics – WS – 2017 – 2018 Income source Share in total household income Gini coefficient for income source Percentage change in Gini coefficient Whole sample Livestock income 0.112 1.157 0.022*** Other income 0.888 0.550 -0.022*** Total income 1.000 0.540 Subsample Livestock income 0.153 0.754 -0.030*** Other income 0.847 0.550 0.030*** Total income 1.000 0.511 * Significant at 10%, ** significant at 5%, *** significant at 1%. Whole sample includes households without and households with livestock in 4 years 2007, 2008, 2010, and 2013, Subsample includes households without livestock and households with positive livestock income in 4 years 2007, 2008, 2010, and 2013, The impact livestock on income inequality in period 2007-2013

×