Education and agricultural growth in Vietnam

Type Report
Title Education and agricultural growth in Vietnam
Publication (Day/Month/Year) 2006
n the 1980s, Vietnam emerged from thirty years of war with literacy and numeracy levelsthat are normally achieved by middle-income countries such as Thailand or Malaysia.When land was redistributed and agricultural markets were liberalised at the end of the1980s and in the early 1990s, farmers faced a new and rapidly changing environment. Meanwhile, the agricultural sector grew at unprecedented rates during the 1990s,transforming Vietnam into a major player in world agricultural export markets. This paper examined the contribution of Vietnam’s initially high levels of education to agricultural growth.I document how in midst of tremendous hardship, Vietnam succeeded in bringing about quasi-universal literacy in North Vietnam. I also trace the gap in educational attainment between North and South Vietnam to the 1954 partition of Vietnam and to the differential implementation of education policies between 1954 and 1975. I make use of thisexogenous variation in education between North and South Vietnam to devise aninstrumental strategy and estimate the effects of various indicators of educational attainment on rice productivity.Whilst the role of education in the process of economic development remains much of a black box, the results here confirm the importance of literacy and numeracy skills as pre-conditions for agricultural growth. Higher levels of skills also matter significantly. The returns to literacy and holding upper secondary degrees yields are 38% and 31%respectively. In many instances, IV estimates were found to be considerably larger than OLS estimates, indicating that measurement error may be more of a problem than omitting to control for innate abilities, when estimating the returns to education.

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