promoting market liberalization in the 1980s and 1990s (Rodrik, 2015). In the field of rural development, land rights advocacy has focused primarily on the poor’s secure access to key productive resources (FAO, 2002). Threats to land rights stem from the lack of reliable means to enforce each person’s right to access land. In order to directly provide more reliable evidence of access or facilitate the collection of evidence of property rights, states often issue land ownership or land use right certificates, raise awareness, redistribute land, etc. To improve the enforcement of land use rights, states strengthen institutions, advocate for land reform; To improve the quality and clarity of evidence, land boundary maps are produced with the hope that land users have concrete evidence to access credit and increase investment outcomes contributing to the expected impacts on increased productivity, incomes and food security.
Land security is enabled by the inputs of improved land demarcation and mapping, issuance and facilitation of the collection of tenure evidence, and institutional strengthening which is also expected to increase land rents and sales. This can shift land to its most productive uses and thus increase productivity, incomes and food security for those who can afford to rent and buy land. If properly managed, land-related conflicts are also expected to decrease, creating community cohesion and cooperation. Several studies have shown that land titling reforms have increased tenure security, investment, productivity and the functioning of land rental markets (Holden et al., 2009; Holden et al., 2011; Deininger et al., 2011; Khai et al., 2013; Ali et al., 2014). At the same time, however, some land use reforms have resulted in elite “grabbing,” marginalizing the poor and minorities. Inefficient and corrupt bureaucracies and the high costs of conventional land distribution have also resulted in unequal distribution of land to poor and vulnerable groups, while favoring the wealthy (Barrows and Roth, 1989, Platteau, 1996, Benjaminsen et al., 2009). Market-assisted land redistribution has been proposed and used as a peaceful approach to achieving more equitable land distribution in a number of countries.
1.2.2. Impact channels from agricultural land use rights on production efficiency
Land use rights are property rights, and thus influence the psychology and decisions in applying technology to manage agricultural production and protect resources. In terms of rural development, ensuring land use rights is considered a
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indispensable part in promoting agricultural productivity, diversifying production and establishing the sustainable environment necessary for rural households to adapt and thrive in the face of increasing challenges to their livelihoods (IFAD, 2016). Since property rights determine behavioral norms for resource transfer and use, it can be expected that differences in property rights will affect economic activities (Libecap, 1986). It can be said that the important economic relationship between land use rights and agricultural production efficiency is reflected in: (i) increased investment in agricultural production; (ii) increased access to credit and capital accumulation, (iii) facilitated exchange and access to land, (iv) increased crop conversion.
Impact of land use rights on agricultural production efficiency through investment
Having a land use right certificate will significantly affect the investment decisions of farmers on their land. Like other forms of production, the results of annual agricultural production depend on the results of investment, including short-term investment and long-term investment. Besides, land is one of the most important inputs in the agricultural production process. Therefore, investment in land is investment for efficiency and this investment decision is often governed by the level of security of ownership. Many studies have shown that secured land use rights can increase investment and promote efficient allocation of land resources (Galiani et al., 2010; Jin and Deininger, 2009).
When analyzing factors affecting agricultural production efficiency, in addition to typical input groups such as capital, labor, land, education, trade, technology and environment, land use rights are an important factor (Hayami, 1969; Antle, 1983; Wiebe, 2003). Especially in developing countries, land is the main asset of most people and the agricultural economy still plays an important role in the national economy. It can be said that if the land plot is guaranteed long-term use rights, the owner will have different decisions than if the owner only has short-term use rights or temporary leases. In economic theory, this is a consideration between profit and risk, the more established the use rights are, the more the risk of investing in the land is minimized, the land user will have more investment options, and therefore will have better choices.
According to Farrell (1957), production efficiency is the synthesis of technical efficiency and allocative efficiency. In which, technical efficiency is expressed in the ability to apply optimal production technologies with existing input factors; in addition, allocative efficiency is expressed in the ability to combine input factors with their prices to achieve the level of investment.
optimal. Therefore, to achieve technical efficiency, farmers need to invest in land improvement and production technologies, including investment in labor quality. This requires a long-term guarantee of new farming rights that can motivate farmers to make investment decisions. Meanwhile, to change in allocative efficiency, farmers need to have certain knowledge of economic analysis, combining existing resources with cost allocation for resources to achieve output goals (Thabethe, 2013; Musa et al., 2015). This also requires an incentive to change from property ownership along with the ability to accumulate capital. Thus, land use rights can have different impacts on aspects of production efficiency.
Empirical studies have also shown the importance of land use rights to investment decisions in the agricultural sector (Galiani et al., 2010; Manjunatha et al., 2013; Ma et al., 2015; Koirala et al., 2016). Studies have confirmed that the most obvious impact of land use insecurity is the uncertainty of long-term benefits from farmers' investments on their farmland. Changes in land use rights can lead to changes in land use efficiency (Barry and Roux, 2016). If land use rights are not secure, the high risk of land expropriation will directly impact the issue of investment in improving land quality and agricultural productivity (Feder and Feeny, 1991). In Vietnam, the urbanization process is taking place quite rapidly, without land use right certificates, there will be concerns about land being recovered, making farmers hesitant to invest in the long term. In addition, Vietnamese agriculture is significantly affected by the weather, without long-term investment in land and measures to prevent natural disasters such as drought, flood, pests, etc., it is impossible to achieve sustainable production efficiency.
Impact of land use rights on production efficiency through credit access and capital accumulation
Land use rights are used as a channel to access credit. In fact, in Vietnam as well as many countries in the world, land use right certificates are a legal evidence for farmers to use as collateral for short- or long-term loans, thereby helping to increase their capacity to invest in production. De Soto (2000) argued that the major barrier to prosperity in developing countries is the inability to convert land into usable assets, due to the lack of clearly recognized legal rights. The author asserts that households with land use right certificates have greater investment capacity, because when qualified to turn land into a transferable commodity, it allows farmers to use it as collateral to access credit needed for productivity-enhancing investments. Feder & Feeny (1991) also pointed out that secured land rights make it easier to
Land can be used as collateral for agricultural investment loans, thereby stimulating investment and capital accumulation. In Vietnam, most farmers are still poor, even those with better incomes, and capital accumulation for production is very small, and access to loans will help improve production inputs. Ensuring land use rights will make it easier for farmers to access credit, creating better conditions for investment in production. Therefore, formalizing land rights through registration and issuance of land use right certificates can reduce liquidity constraints, allowing farmers to improve input use and thus increase production efficiency at the household level. Recent studies from Peru (Field et al., 2006), Nicaragua (Macours, 2013), Mexico (Dower and Pfutze, 2013), Rwanda (Ali and Deininger, 2015) all confirm the positive impact of agricultural land use rights on credit access.
Impact of land use rights on production efficiency through exchange, rent and lease of agricultural land
Land use rights affect land productivity through land transfer activities. Specifically, when land has a land use right certificate, farmers will feel more secure when renting, transferring or buying land. This makes land use more flexible and farmers can sell or rent land more easily, thereby creating more favorable opportunities for investment in land improvement measures. When there is no solid evidence of land use rights, farmers will have difficulty in exchanging and transferring because those who want to own land will worry about the land being recovered or redistributed, and landowners will leave the land fallow or cultivate it themselves even though the crop productivity would be much better under another operator (potential tenant) with better skills and better additional inputs for farming. Therefore, in macroeconomic terms, secure land tenure can lead to a larger land rental market, with those who are able to invest in expanding production towards industrialization and crop diversification having more opportunities and incentives to invest in production. Ghebru and Holden (2015) assert that formalization of land rights affects agricultural productivity through transaction effects by facilitating smooth land transactions.
The agricultural land market in Vietnam currently has a short development time, the institution is not yet complete, and the market components are still lacking (Chung, 2018). Specifically, the survey results in 2014 showed that the rate of households leasing agricultural land was only 10.5% and the rate of agricultural land for lease was below 5%, even individual households
Land leasing is mostly limited to families and relatives 1 . The process of exchanging fields has been taking place sporadically in the provinces, but usually only less than 10% of farmers exchange fields with each other to create more favorable conditions for farming or to focus on farm development. A commune in the Red River Delta has about 2-3 households exchanging fields with other households to build farms (General Statistics Office, 2017). However, this activity is completely spontaneous, the authorities at all levels have little knowledge and have not legalized this field exchange activity. The form of land leasing by farmers is also in a similar situation due to difficulties in administrative procedures related to land use rights (Chung, 2018). Therefore, clear land use rights for land can lead to a reduction in costs and risks of land transactions, ultimately improving resource allocation factors and agricultural productivity. Studies on agricultural efficiency due to the effects of land use rights have supported this view. In Ethiopia (Deininger et al., 2006) and Mexico (Dower and Pfutze, 2013), LURs have a positive impact on land rentals and sales. The Mexican study assessed the specific impact of LURs on land sales and found that sales were better if land was granted with use rights.
Impact of land use rights on production efficiency through crop conversion
Agricultural land tenure also has a direct impact on food production choices. In cases where access to land is insecure, crop diversification is often discouraged by farmers. According to Vlassenroot (2005), households with insecure access to land tend to choose less risky and seasonal crops instead of perennial crops. These factors lead to changes in land use quality and put food security under stress. In addition, agricultural production is highly dependent on environmental factors, so environmental changes are expected to have different impacts on productivity, food security and agricultural livelihoods (Dixon et al., 2001; Dinar et al., 2008). To sustain their livelihoods, farmers need to change their crop types and diversify their production models, such as: using new crop varieties, diversifying crops, changing planting dates, diversifying from agricultural to non-agricultural activities, increasing the use of water and soil conservation techniques, changing the use of capital and labor, shading and sheltering. Land tenure is an important factor in a household’s decision to invest and change crops. Farmers are less willing to make changes – which may require more input investment – when their land is insecure or they do not have full rights to said land. These include crop diversification strategies,
1. https://tapchicongsan.org.vn/web/guest/nghien-cu/-/2018/47126/mot-so-van-de-xung-quanh-tich-tu%2C-tap-trung-ruong-dat.aspx
farming practices or adjusting farming schedules, land use strategies (see Maddison, 2006; Deressa et al., 2009; Hisali et al., 2011). Therefore, secure land use rights are a necessary condition for farmers to make their change decisions.
In addition to the main impacts mentioned above, LURs also have other social impacts such as: (i) reducing gender inequality within households (or more precisely, empowering women); (ii) reducing land conflicts; and (iii) improving food security. One of the important findings related to the impacts of LURs is that improved land inheritance rights give women the opportunity to engage in self-employment, increasing their ability to participate in family decision-making (Brulé, 2010; Deininger et al., 2011). On the other hand, the increase in women's de facto land inheritance rights also increases the age of marriage and educational attainment.
The above arguments show that clear land use rights are the key to promoting long-term investment and efficient land use. On the contrary, ambiguous land use rights are the root cause of many land problems such as: inefficient and wasteful land use, conversion and overdevelopment, competition and disputes over land access (Wang et al., 2015). Economically, farmers with secure land rights are expected to provide sufficient incentives to invest in agricultural activities because of the belief that they will earn sufficient profits (Meinzen-Dick and Mwangi, 2009). If land use rights are not secure, farmers do not feel attached to the land they cultivate, do not invest in land development, and will not use inputs efficiently and sustainably. Thus, it can be seen that agricultural land use rights have a significant impact on agricultural production efficiency through many channels of impact. This is the basis for the argument about the causal relationship between land use rights and agricultural production efficiency, and is the premise for empirical studies on the role of land use rights on agricultural production efficiency.
1.3. Research overview
1.3.1. Overview of research in the world
Agricultural production is an important part of the economy of many countries. Therefore, there have been many studies in the world on agricultural production efficiency, and it can be divided into two main areas. The first area is concerned with measuring production efficiency from different aspects, including: technical efficiency, allocative efficiency and economic efficiency, and the second area is to study the factors affecting efficiency, including the role of land use rights.
Studies on estimating technical efficiency, allocative efficiency, economic efficiency
There are two main approaches to measuring technical efficiency: parametric and non-parametric approaches. The parametric approach involves identifying and estimating a production function (either a revenue or a cost or a profit function) in parametric form that represents the best available technology as introduced by Aigner et al. (1977) or Meeusen and Van den Broeck (1977). The functions can be estimated by either deterministic or stochastic methods, of which the stochastic frontier analysis (SFA) method introduced by Coelli (1995) is considered the most popular. This approach has the advantage of being able to perform statistical hypothesis testing on the estimated results, however, its limitation is that if the chosen functional form is inappropriate, the results may not be reliable. There have been many studies using this method in measuring technical efficiency, typically in developing countries (see, for example, Dawson and Lingard, 1989; Battese and Coelli, 1992; Tiongco and Dawe, 2002; Abedullah and Mushtaq, 2007; Koirala et al., 2014).
Studies measuring technical efficiency have used SFA for various types of data. Ali and Flinn (1989) used SFA to estimate the efficiency of Basmati rice production for farmers in Pakistan. The authors used 1982 rice crop data from 120 farmers randomly selected from two major rice-growing villages in Pakistan. The average technical efficiency was estimated to be 72% and was widely dispersed (from 5% to 87%). The study confirmed that this result depends on the level of education, access to extension services and agricultural information. Besides, the study also pointed out that financial constraints are one of the factors that reduce production efficiency. Further studies by Abedullah and Mushtaq (2007) used data collected from 200 farmers in 2005 in Sheikhupura district, one of the major rice-growing districts in Punjab province, Pakistan. Stochastic frontier production function (SPF) was used to measure technical efficiency. The results showed that the average technical efficiency was 91% and was in the range (53; 98)%. The authors showed that farmer age and farm size had a significant positive impact on technical efficiency; education and mechanization (tractor ownership) played an important role in improving farmers' technical efficiency.
Battese and Coelli (1992), using panel data from 1975-1985 studied the production efficiency of rice farmers in India. From the stochastic frontier production function, the technical efficiency score was estimated to range from 0.55 to 0.86 for the period 1975-1976 and from 0.84 to 0.96 for the period 1984-1985. In addition, the proportion of land under cultivation, farm size and labor cost had a positive impact on rice production.
rice. Abdulai et al. (2001) used data from 120 households in Nicaragua from April 1994 to March 1995 to estimate technical efficiency in maize and soybean production using SFA. Technical efficiency for maize production ranged from 31.28% to 93.27% with an estimated mean technical efficiency of 69.76%. For bean production, technical efficiency ranged from 33.86% to 92.08%, with an average of 74.16%. The results also showed that education level, farming experience, access to formal credit, and family size were important variables for improving technical efficiency. Diagne et al. (2013) investigated rice productivity in the Senegal River Valley using data from 2002 to 2006. They measured technical efficiency scores ranging from 55% to 60%. Furthermore, the authors found that fertilizers, herbicides, bird control efforts, and the use of postharvest technologies such as cleaning machines significantly improved the technical efficiency of rice producers.
Traditionally, the production technology function has been widely used to measure the efficiency components (Tzouvelekas et al., 2001; Wadud and White, 2000). However, according to Ali and Flinn (1989), the production technology function approach may not be appropriate when estimating the economic efficiency of individual households because households may face different prices and have different incentives. Therefore, different households have different “best practice” production functions as well as different optimal levels. In addition, profit efficiency is defined as the ability of a household to achieve the highest possible profit, given the price and quantity of its inputs, and any errors in production decisions (technical and allocation) will directly affect the profit of the household (Ali et al., 1994). From this perspective, there are quite a few studies measuring technical efficiency with stochastic marginal returns. Rahman.S and Rahman.R (2009) measured the production efficiency of rice farmers in Bangladesh using a stochastic marginal return model. The data were for 1996, covering 21 villages in three agricultural regions of Bangladesh. The results showed that the average profit efficiency was 77%. The differences in efficiency among households were largely explained by infrastructure, soil fertility, experience, extension services, house rent, and share of off-farm income. Similarly, Nganga (2010) using a stochastic marginal return model found that the profit efficiency of smallholder dairy producers in Kenya ranged from 26% to 73%, with an average of 60%. Farm size positively affected profit efficiency, while profit efficiency decreased with farm age. Ogunniyi (2011) used stochastic marginal profit function to measure profit efficiency among maize producers in Oyo State, Nigeria. Multi-stage random sampling method was used to select 240 maize producers. The results showed