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.
Agricultural Investment and Structural Change: Evidence from Rural Vietnam
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
Outline
ReSAKSS – Asia Conference, Bangkok, 12-14.12.2017
Introduction
Research Questions
Data & Methods
Main Findings
Summary & Implications
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
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
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
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
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
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
Method(2): Combined PSM with DID (M-DID)
We combine with-without with before-after
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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
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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
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
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%
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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
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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
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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
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
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
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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
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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
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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.
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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
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
Hinweis der Redaktion
1
Agricultural investment: last three year: A.investment 2007 is sum of 2005-2007
First dif: before vs after (after – before), second dif: with vs. without using PSM. Data only 2007 and 2013
Livestock income share of the farm income, not total household income
3 types of shocks: demographic shocks, weather shocks, economic shocks (price increase), livestock diseases and crop pest. Herewith only demographic shock is considered
Xem newest words file: the last model (all together): Table 7 . Sample reduced because of lag two times, plus excluding households with inactive labor such as house wife, army, old persons (all labour of the household are inactive), and additionally it runs only for a balanced sample
Different threshold value (1.25 and 2 PPP), both income and consumption, for the whole subsamples, and with shocks (income shocks without livestock diseases)
Both income shock and livestock diseases lead to negative livestock income
In addition, we also examine the effect of livestock on income inequality using the Gini decomposition methods (marginal effect or elasticity) - last slide. Data only 2007, 2008, 2010, 2013 as 2016 not yet avaialble
This model is without lag
This model is without lag
This is the lagged model (3SLS) – similar to Pryanka: run all 5 equations simultaneously