Productivity of the Rice Industry in Viet Nam: 1976 to 1995

Abstract

Rice has proven to be an important crop for agriculture in Viet Nam and a strong contributor to the nation's economic growth. There has been rapid growth of rice production as well as its total factor productivity (TFP). One of the main objectives of this study was to examine the broad trends and patterns of growth of TFP in the rice industry in Viet Nam over the period from 1976 to 1995. Multilateral-Tornqvist (CCD) index formulae were used to derive input, output and TFP indexes for the rice industry, over time and across regions. It was found that between 1976 and 1981, the period before agricultural reform, rice output grew largely due to increased use of inputs rather than improved productivity. Output growth of rice for the sub-period 1981-87, the first agricultural reform, was 2.32 per cent a year with TFP contributing 73.3 per cent of the growth. Between 1987 and 1995, the second agricultural reform, rice output growth was 4.12 per cent a year with TFP growth accounting for 82.2 per cent of this. Over the study period, TFP growth contributed 72 per cent to rice output growth, while total input growth contributed 28 per cent. TFP growth rate was only 0.54 per cent a year in the first sub-period, 1976-81. However, there have been differences in the contributions of growth rates of input and TFP to growth rate of rice output as well as differences in levels of input, output and TFP indexes across regions over the study period. The information gained from this study could guide policy making in promoting further growth of rice production and smoothing regional inequalities in the rice industry in Viet Nam.