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Incentives and static and dynamic gains from market reform: rice production in Vietnam
Author(s) -
Che Tuong Nhu,
Kompas Tom,
Vousden Neil
Publication year - 2001
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/1467-8489.00157
Subject(s) - incentive , economics , dynamic efficiency , production (economics) , productivity , work (physics) , property rights , capital (architecture) , stock (firearms) , monetary economics , market economy , microeconomics , macroeconomics , mechanical engineering , history , archaeology , engineering
This article develops a dynamic model to account for the enhanced incentive effects that result from market reform through a move toward private property rights and competitive markets. Reform is captured through an emerging profits function which depends on effective prices and incentives to work harder. Static and dynamic output gains from reform are derived through increases in total factor productivity and induced capital accumulation. The model is applied to rice production in Vietnam over the period 1976–94. The more extensive is market reform, the larger the effects found on rice output, the capital stock and transitional growth rates, suggesting that incentives and more competitive markets matter greatly.