Drivers of transaction costs affecting participation in the rental market for cropland in Vietnam | Land Portal

Resource information

Date of publication: 
December 2016
Resource Language: 
ISBN / Resource ID: 

Farm incomes in rural Vietnam are tightly constrained by very small farm sizes. Stringent limits on the area of cropland that individuals may own means that farmers need a well‐functioning rental market to consolidate land parcels, grow their farm enterprises, adopt new technology and increase incomes. This research investigates the efficiency and equity impacts of the rental market in rural Vietnam and attempts to identify transaction costs impeding the market. A generalised ordered logit model with shifting thresholds allowing transaction costs to impact lessors and lessees differently was specified and estimated using data extracted from the Vietnam Household Living Standards Surveys. The findings show that rental transactions reduced imbalances in factor endowments, transferring cropland to households that were relatively land‐poor but more willing and able to farm. However, the market is constrained by transaction costs that affect lessors and lessees differently. It is recommended that government should complete its land registration program and relax restrictions on the use of wetlands to grow crops other than rice. It should also improve access to all‐weather roads as this encourages participation on both sides of the rental market, whereas better access to communications infrastructure was found to promote only the supply side.

Authors and Publishers

Author(s), editor(s), contributor(s): 

Hoang_Trieu_Huy, _
Lyne, Michael
Ratna, Nazmun
Nuthall, Peter

Data provider

The purpose of the Mekong Land Research Forum online site is to provide structured access to published and unpublished research on land issues in the Mekong Region. It is based on the premise that debates and decisions around land governance can be enhanced by drawing on the considerable volume of research, documented experience and action-based reflection that is available.

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