Vietnam's Agrarian Reform, Rural Livelihood and Policy ... - Rimisp

2. 1. Declining Agricultural Growth and Low EfficiencyThough agricultural growth has been high after the economic reform, its sustainability and efficiency isbeing under big questions. The growth of agriculture in Viet Nam over the last 20 years was the resultof a combination of institutional factors such as new incentives to farmers recognized by Doi Moi asautonomous economic agents and physical factors such as land, labor, capital (mostly in the form ofirrigation system), and intermediate inputs such as fertilizer.Table 1. Agricultural Growth Accounting Estimation in Vietnam, 1986–2005Period Ag. GDP Labor Tractor Pump Fertilizer Area ofAnnualCropGrowth (percent)Area ofPerennialCrop1986–902.7 2.5 -4.7 -1.2 -3.4 0.8 5.41991–954.7 6.9 28.6 25.6 13.4 2.0 7.81996–20004.9 1.3 10.5 10.3 4.0 2.7 9.82001–20053.7 1.0 5.7 4.4 1.4 1.0 3.01986–20053.8 2.7 10.5 9.8 8.0 1.7 6.3Factors contributing to growth, based on their elasticities (percent)1986–902.7 0.8 -0.2 -0.1 -0.5 0.3 0.2 2.01991–954.7 2.2 0.9 1.4 1.8 0.8 0.4 -2.81996–20004.9 0.4 0.3 0.6 0.5 1.1 0.4 1.52001–20053.7 0.3 0.2 0.2 0.2 0.4 0.1 2.21986–20053.8 0.9 0.3 0.5 1.1 0.7 0.3 0.0Percent of factors contributing to 1 percent agricultural growth1986–90100.0 29.9 -5.9 -2.4 -17.1 12.4 9.2 73.91991–95100.0 47.5 19.9 29.4 37.9 17.6 7.4 -59.71996–2000100.0 8.9 7.0 11.4 10.9 22.3 9.1 30.32001–2005100.0 8.5 5.1 6.5 5.2 11.4 3.7 59.51986–2005100.0 23.2 9.1 14.0 28.3 18.2 7.5 -0.3Elasticities (percent)32.5 3.3 5.4 13.4 40.9 4.5Note: TFP is the residual of agricultural growth minus sum of factor growth weighted by elasticities.Source: Nguyen, D.A.T. 2008.TFPOver the 20 years of Doi Moi, investment in agricultural inputs (best illustrated by volume of fertilizers)and labor has played the most important role, contributing 23.2 and 28.3 percent respectively to theoverall growth of agriculture. Increased acreage of crops has brought about 25 percent of the growthof the sector (see Table 1), which has been significantly enhaced by large investment in irrigationsystem by the government.Yet, the growth accounting framework shows that technology innovation made just modestcontribution to agricultural growth. Role of investment in production modernization (indicated by the10