Crop Diversification, Economic Performance and Household's Behaviours: Evidence from Vietnam

Type Working Paper
Title Crop Diversification, Economic Performance and Household's Behaviours: Evidence from Vietnam
Author(s)
Publication (Day/Month/Year) 2014
URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2503210
Abstract
This study examines economic performance and household behaviour in multiple crop farming in Vietnam by measuring scale and scope economies, technical efficiency, and elasticities of substitution between inputs. The farming system in Vietnam is being transformed by integration between a set of cash crops and main food cropping operations. This transformation into diversified farming systems, where smallholders have a production base in rice, can affect the economies of scope, technical efficiency, and performance of farms. By using the approach of the input distance function, evidence is found of both scale and scope economies. These findings have important economic performance implications. Substantial technical inefficiency exists in multiple crops farming, which implies that crop outputs could, in principle, be expanded by 20 per cent by eliminating technical inefficiency. Enhancing education and further land reforms are the main technical efficiency shifters. The evidence of complementary between family labour and other inputs, except hired labour, is also found. Thus, policies that lead to more incentives to invest in crop faming activities should focus on the reduction of input costs. The findings show further that more adverse the farm production condition, the more efficiently resources are allocated.

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