Agro-Enterprise Performance and Rural Investment Climate: Evidence from the North of Vietnam
This paper measures the impact of rural investment climate factors on the total factor productivity (TFP) of agro-enterprises in the North of Vietnam. Endogeneity of the production function and of the rural investment climate variables is addressed by using econometric models, based on individual agro-enterprise information, and by aggregating rural investment climate factors by various business lines and regions. Using agro-enterprise survey data, we conduct the analysis consist of two steps: firstly, an econometric regression of production function is estimated to produce a measure of TFP at the firm level; and secondly, the variation in TFP across agro-enterprises is statistically related to the rural investment climate factors as well as agro-enterprise characteristics. The result yields a number of insights on the factors that underlie productivity. In across various business lines and regions, the indicators of poor rural investment climate such as administrative procedures, outages and policy uncertain have significant negative effects on agro-enterprise productivity. In contrast, the other indicators include number of year in land using, internet use, and regional advantages have positive impact on TFP. However, the effects of the rural investment climate factors in magnitude on agro-enterprise performance are various among business lines and regions.
Key words: Agro-Enterprise performance; TFP; Rural investment climate; North of Vietnam
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