Investment and Agricultural Development in Developing Countries

The Case of Vietnam

The standard policy prescription to enhance the productivity of agriculture in a developing country like Vietnam is first to encourage the investment of farmers in their human and social capital and then to change the governmental institutions to facilitate the farmers investment. This book, therefore, analyzes the investment of farmers in their health, education, and social relationships in the context of Vietnams recent agrarian transition. Using the tools of regression analysis, the author has tried to measure the rate of return of investment in health, education, and social relationship of farmers on their income. Additionally, to measure the effect of local government policy on the performance of agricultural firms at the provincial level, the book applies current techniques to estimate the relationship between output of agricultural firms and performance of local government. As in other low-developed countries, the rate of return of investment in education is quite extreme and the rate of investment in health is small. The effect of investment in social capital of farmers on their income is quite complex due to the complication of the term social capital. Moreover, the effect of quality of local institutions on performance of agricultural firms at the provincial level is not quite statistically significant. The relationship is similar with other research findings worldwide when researchers want to measure the effect of quality of institution on the performance of firms.