Luận văn thạc sĩ UEH technical efficiency of rice production in vietnam

UNIVERSITY OF ECONOMICS

HO CHI MINH CITY

VIETNAM

INSTITUTE OF SOCIAL STUDIES

THE HAGUE

THE NETHERLANDS

VIETNAM- NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

TECHNICAL EFFICIENCY

OF RICE PRODUCTION IN VIET NAM

BY

LE HOANG VIET PHUONG

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, DECEMBER 2012

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UNIVERSITY OF ECONOMICS

HO CHI MINH CITY

VIETNAM

INSTITUTE OF SOCIAL STUDIES

THE HAGUE

THE NETHERLANDS

VIETNAM- NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

TECHNICAL EFFICIENCY

OF RICE PRODUCTION IN VIETNAM

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By

LE HOANG VIET PHUONG

Academic Supervisor:

DR. PHAM KHANH NAM

DR. PHAM LE THONG

HO CHI MINH CITY, DECEMBER 2012

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•.

DECLARATION

I declare that "Technical efficiency of rice production in Vietnam" is my own works, it has

not been submitted to any degree at other universities.

I confirm that I have made by effort and applied all knowledge for finishing this thesis in the

best way.

HCMC, December 2012

LE HOANG VIET PHUONG

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i

I

ACKNOWLEDGEMENTS

When working on this thesis, I had been given much valuable help and encouragement which

is a strong motivation for me to go through difficulties and finish the thesis.

First of all, I kindly give my sincere thanks to Dr. Pham Khanh Nam and Dr. Pham Le

Thong who wholeheartedly helped and guided me through the thesis.

I would like to give my thanks to Associate Prof. Dr. Nguyen Trong Hoai- Vice Principal

of the University of Economics & Director of Vietnam - Netherlands Programme for MA in

Development Economics who facilitated me when I was doing the thesis as well as in the past

two year Postgraduate Program.

I would like to give my thanks to Dr. Do Thi Loan - Deputy Chairwoman & Secretary

General of HCMC Real Estate Association who wholeheartedly guided me to do the thesis and

allowed me to have valuable time to finish the thesis.

I would like to extend my thanks to:

Dr. Nguyen Huu Dung for his comments related to my TRD.

Dr. Hay Sinh, Dr. Nguyen Quynh Hoa, Dr. Nguyen Ngoc Vinh, Dr. Tran Tien

Khai, Dr. Le Van Chon, MA. Truong Quang Hung, MDE. Phung Thanh Binh

and MBA. Hoang Tuyet Thu who always encourage and support me during my study

and my doing this thesis;

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..,

MBA. Nguyen Khanh Duy and MDE. Nguyen Ngoc Danh for their proposal and

guides related to my subject;

Lecturers of Economics Development Faculty, HCMC University of Economics and

other lecturers having participated in Vietnam- Netherlands Programme forMA

in Development Economics who shared their precious experiences which I could

apply to the thesis as well as to my work.

Lastly, I would like to express my heartfelt thanks to my family, my friends and my

colleagues in HCMC Real Estate Association who are always by my side.

Ho Chi Minh City, December 2012

111

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•,

ABSTRACT

This study estimates the technical efficiency of the rice farmers in Vietnam from the stochastic

frontier production function using Vietnam Access to Resources Household Survey (2008).

This study finds that the labour, machine, seed, fertilizer, pesticide and herbicide strongly

affect rice productivity. The mean technical efficiency of farmers is 60.28%. The technical

efficiency level of sampled farmers ranges from 17.79% to 89.38%. Number of household

members, age of farmer, experience, education, credit access, training program are predictors

of technical efficiency. Finally, joining associations or groups which is proxy variable of

social capital also strongly affect technical efficiency. However, the result is very interesting

and different with my expectation. In my study, the farmers who join more in Farmers' Union,

Union and other groups will produce less than that in the other farmers.

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TABLE OF CONTENTS

DECLARATION ......................................................................................................................... i

ACKNOWLEDGEMENTS ........................................................................................................ ii

ABSTRACT ............................................................................................................................... iv

TABLE OF CONTENTS ............................................................................................................ v

LIST OF TABLES .................................................................................................................... vii

LIST OF FIGURES ................................................................................................................. viii

LIST OF ABBREVIATIONS .................................................................................................... ix

CHAPTER I INTRODUCTION ................................................................................................. 1

1.1 Problem statement. ............................................................................................................ 1

1.3 Research questions ............................................................................................................ 3

1.4 Scope of study and data .................................................................................................... 3

1. 5 Thesis structure ................................................................................................................. 4

CHAPTER II LITERATURE REVIEW .................................................................................... 5

2.1 Literature review on economic efficiency ........................................................................ 5

2.1.1 Technical efficiency ................................................................................................... 5

2.1.2 Allocative efficiency .................................................................................................. 5

2.1.3 Graph explanation for technical efficiency, allocative efficiency and economic

efficiency ............................................................................................................................ 6

2.2 Stochastic frontier analysis framework ............................................................................. 8

2.2.1 Stochastic frontier model and technical efficiency measurement ............................. 8

2.2.2 Graph explanation for stochastic frontier model and technical efficiency ................ 9

2.3 Social capital concepts .................................................................................................... 10

2.4 Empirical review ............................................................................................................. 11

2.5 Chapter remark ............................................................................................................... 21

CHAPTER III RESEARCH METHODOLOGY ..................................................................... 22

3.1 Data ................................................................................................................................. 22

3.2 Empirical framework ...................................................................................................... 23

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3.3 Models Specification ...................................................................................................... 24

3.3.1 Stochastic frontier production model.. ..................................................................... 24

3.3.2 Technical efficiency model.. .................................................................................... 31

3.4 Chapter remark ................................................................................................................ 40

CHAPTER IV ANALYSIS AND RESULTS .......................................................................... 41

4.1 Descriptive statistics ....................................................................................................... 41

4.1.1 Descriptive statistics of rice production ................................................................... 41

4.1.2 Descriptive statistic of inputs contribution .............................................................. 43

4.1.3 Descriptive statistic of variables in technical efficiency model .............................. 44

4.1.4 Descriptive statistics of credit access ....................................................................... 45

4.1.5 Descriptive statistic of social capital ....................................................................... 46

4.2 Estimations results and discussions ................................................................................ 47

4.2.1 Stochastic frontier production model.. ..................................................................... 47

4.2.2 Discussion of stochastic frontier production model ................................................ 49

4.3 Technical efficiency level and discussions ..................................................................... 50

4.3.1 Technical efficiency level ........................................................................................ 50

4.3.2 Discussion of technical efficiency level .................................................................. 52

4.4 Technical efficiency model and discussions ................................................................... 52

4.4.1 Correlation matrix of independent variables ........................................................... 52

4.4.2 Technical efficiency model. ..................................................................................... 53

4.4.3 Discussion oftechnical efficiency model ................................................................ 55

4.5 Chapter remark ................................................................................................................ 58

CHAPTER V CONCLUSION AND POLICY IMPLICATION ............................................. 59

5.1 Conclusion ...................................................................................................................... 59

5.2 Policy implication ........................................................................................................... 60

5.3 Limitation and further research ....................................................................................... 61

REFERENCES ......................................................................................................................... 63

APPENDIX ............................................................................................................................... 67

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