Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis

Stephen Ayerst, Loren Brandt () and Diego Restuccia

Working Papers from University of Toronto, Department of Economics

Abstract: The expansion in farm size is an important contributor to agricultural productivity in developed countries where more productive farms are larger, but in less developed economies the allocation of factor inputs to more productive farms is hindered. How do distortions to factor-input allocation affect farm dynamics and agricultural productivity? We develop a model of heterogeneous farms making cropping choices and investing in productivity improvements. We calibrate the model using detailed farm-level panel data from Vietnam, exploiting regional differences in agricultural institutions and outcomes. We focus on south Vietnam and quantify the effect of higher measured distortions in the North on farm choices and agricultural productivity. We find that the higher distortions in north Vietnam reduce agricultural productivity by 47%, accounting for 70% of the observed 2.5-fold difference between regions. Moreover, two-thirds of the productivity loss is driven by farms' choice of lower productivity crops and reductions in productivity-enhancing investment, which more than doubles the productivity loss from static factor misallocation.

Keywords: Farm dynamics; productivity; size; distortions; misallocation; Vietnam. (search for similar items in EconPapers)
JEL-codes: O11 O14 O4 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2023-08-18
New Economics Papers: this item is included in nep-agr, nep-eff, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.economics.utoronto.ca/public/workingPapers/tecipa-754.pdf Main Text (application/pdf)

Related works:
Working Paper: Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis (2024)
Working Paper: Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis (2023)
Working Paper: Distortions, Producer Dynamics, and Aggregate Productivity: A General Equilibrium Analysis (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-754

Access Statistics for this paper

More papers in Working Papers from University of Toronto, Department of Economics 150 St. George Street, Toronto, Ontario.
Bibliographic data for series maintained by RePEc Maintainer ().