QUALITY OF PROVINCIAL GOVERNANCE AND FACTORS AFFECTING THE LEVEL OF LAND ABANDONMENT OF RURAL HOUSEHOLDS IN VIETNAM

QUALITY OF PROVINCIAL GOVERNANCE AND FACTORS AFFECTING THE LEVEL OF LAND ABANDONMENT OF RURAL HOUSEHOLDS IN VIETNAM

QUALITY OF PROVINCIAL GOVERNANCE AND FACTORS AFFECTING THE LEVEL OF LAND ABANDONMENT OF RURAL HOUSEHOLDS IN VIETNAM

Phung Minh Đuc

Đang Huy Ngan

Bui Quoc Hoan

Nguyen Thi Quy

Đoan Trong Tuyen

National Economics University

Abstract: This article analyzes the impact of provincial governance and various factors on the level of agricultural land abandonment among rural households in Vietnam. In the context of increasing labor migration towards non-agricultural employment, the underutilization of agricultural land, and even land abandonment, is becoming increasingly common. 

This leads to a waste of resources and, more seriously, could threaten the long-term sustainable development of the agricultural sector. Using an econometric model with panel data from the 2014–2020 period, the research results show that the quality of provincial governance has a positive impact: it contributes to reducing the rate of farmland abandonment during crop seasons.

In addition, the research findings also provide evidence of the influence of demographic characteristics such as household head’s age and education, land characteristics, employment transition levels, and access to credit on the degree of farmland abandonment.

This highlights the positive role of local governments in land management and support for the agricultural land market, as well as several factors that contribute to enhancing the efficiency of agricultural land use in Vietnam today.

Keywords: Agricultural land abandonment, provincial government, job conversion, Vietnam.

I. Introduction

1. Overview

In recent years, industrialization in Vietnam has brought about many changes in all aspects of economic and social life, significantly impacting rural agricultural life. The development of the service industry and urbanization process has created many employment opportunities and non-agricultural income (Chen et al., 2023), thereby stimulating the job transition process of rural labor (Lewis, 1954).

This process leads to an increase in the demand for the exchange of production resources, in which agricultural land is transferred from households that do not need to use it – due to labor transitioning jobs or migrating – to households that need to own land to expand production scale. This helps increase the efficiency of resource allocation, enhance labor productivity, and promote the prosperity of the rural agricultural sector (Ranis and Fei, 1961; Syrquin, 1988).

However, in reality, the transfer process of agricultural land between production entities – mostly small production households – is currently facing certain barriers, reflected in the increasing trend of agricultural land abandonment in recent years (Hữu Chánh, 2022).

Although not officially statistically nationwide, according to records in some localities in the Red River Delta such as Hanoi, Vinh Phuc, and Thai Binh, the area of abandoned agricultural land in each province reaches thousands of hectares (Hữu Chánh, 2022; Mạnh Thắng, 2022).

The abandonment of farmland on the one hand shows a significant change in the demand for the use of agricultural land by households, on the other hand, it also shows considerable existing barriers in the land circulation process between production entities in the economy.

This also indicates that the motivation for change of farming households regarding the habit of abandoning agricultural land is very low. This increases the uncertainty of sustainable agricultural development in the industrialization period.

There are many factors that create barriers to the circulation of agricultural land in the economy. From a market perspective, agricultural land is a highly specific and inflexible “commodity” (Bradfield et al., 2020). This depends on binding legal regulations, as well as the psychological influence of people when participating in the market.

For the sale or transfer of agricultural land use rights, the regulations on the ceiling area of land held by households (Trieu et al., 2016); the uncertainty and rigidity in agricultural land use plans regulated by local authorities (Deininger et al., 2014); and the mentality of keeping land as a livelihood risk reserve by households, although they have switched to non-agricultural jobs, are important barriers (Lai Hoa, 2023).

For the rental of agricultural land, the lack of trust in the ability to recover land when leased to enterprises by households, or difficulties in finding and negotiating rental prices and terms between parties are also significant barriers (Nguyen Viet Dung, 2022).

These barriers increase the inefficiency in the process of reallocating agricultural land, reducing the motivation of households in efforts to improve land use efficiency. These barriers generally stem from inadequacies in the agricultural land market in Vietnam, where there is currently a lack of intermediary organizations supporting the market, such as exchanges or agricultural land banks.

These organizations can play a role in providing information, connecting, and promoting cooperation, ensuring the legality of agricultural land transfer agreements (Xhoxhi et al., 2019).

Although the Government has a policy of establishing an organization playing the role of agricultural land bank, mentioned in the 2022 Resolution No. 18-NQ/TW, there is no specific implementation roadmap. In this context, the role of local authorities is important and can affect the operation and development of the agricultural land market.

For example, local authorities can address the issue by supporting farmers to lease land use rights on a large scale and for a term of 10 years or more; or by leasing land from farmers and then subleasing it to enterprises (Vy Huong, 2017). This reinforces trust among parties and reduces the uncertainty of the agricultural land market, helping the market operate more efficiently and thereby reducing the level of land abandonment.

Although the role of provincial authorities in economic activities is a topic of broad interest among researchers (Phạm Thế Anh and Chu Thị Mai Phương, 2015), according to the author’s understanding, there is currently a lack of research focusing on the impact of provincial authorities on the motivation of households in the issue of agricultural land abandonment.

A thorough understanding of this role is very important, helping to suggest policy implications to contribute to changing household motivations regarding land abandonment, thereby increasing the efficiency of agricultural land allocation in Vietnam.

This paper aims to clarify the impact of provincial authorities on the motivation of rural households in the issue of agricultural land abandonment. In addition to reviewing the research literature on the subject, an econometric model with the Generalized Estimating Equations (GEE) method will be introduced in the paper. The data used in the analysis is compiled by the author from the Vietnam Access to Resources Household Survey (VARHS), during the period 2014 – 2020.

The structure of the paper is as follows: The next section presents the theoretical basis and research overview on the role of provincial authorities in economic activities and the agricultural land market; the third section presents the research methodology, including data description, model, and estimation method; the fourth section is the research results and discussion; the final section is the conclusion and some policy recommendations.

2. Research Overview

Research on the motivation of agricultural land circulation between production entities is a topic that has garnered the interest of many researchers (Ou & Gong, 2021; Xie et al., 2023). Generally, most researchers agree with the view that the reallocation of agricultural land is an inevitable consequence of the industrialization transition from traditional agriculture (Lewis, 1954; Liao et al., 2019).

As the service industry develops, the supply of agricultural land will increase due to labor transitioning to non-agricultural jobs more frequently, while rising incomes also enhance the ability to own land to expand production for some households and enterprises.

Empirical studies by Huang et al. (2012) and Wang et al. (2020) have shown that non-agricultural employment significantly impacts land transfer activities in rural areas of China, especially in land use rights leasing transactions. However, these activities depend significantly on the specific socio-economic environment of the locality, where the role of provincial authorities plays an important part (Wang et al., 2020).

Many studies have shown the role of provincial authorities in creating an efficient business environment, helping to reduce transaction costs and positively impacting economic activities (Jonasson, 2011; Harun & Kamase, 2012).

In the issue of resource allocation, some studies indicate that provincial authorities play an important role, such as improving access to land by reducing time and costs in the procedures for issuing land use rights certificates (Deininger et al., 2014), as well as reducing transaction costs for land sales (Trieu et al., 2016).

Additionally, improvements in the land management methods of provincial authorities also positively impact agricultural land use rights transactions, thereby accelerating the process of land accumulation in rural areas (Shi & Tang, 2020).

Although many studies have shown the role of provincial authorities in the reallocation of agricultural land in many countries, in Vietnam this has not been clarified. Among the few studies related to this topic, Trieu et al. (2016) have shown that differences in transaction costs significantly affect agricultural land rental transactions in localities. This implies that the law enforcement process of various levels of government plays an important role, as the dynamism of local authorities can help remove barriers to the market, such as reducing the cost burden of each land transaction.

However, the role of provincial authorities has not been specifically addressed in the study by Trieu et al. (2016) or related studies. Beyond law enforcement, local governments also play a role in market management and regulation, such as promoting support, increasing connectivity, and ensuring legal certainty for transactions, which can directly affect the reallocation of agricultural land.

Additionally, the role of provincial authorities in the motivation of households regarding the abandonment of farmland – a typical issue of inefficient agricultural land allocation – has not been mentioned in research to date.

In addition to the role of provincial authorities, the research overview shows that the process of agricultural land allocation is influenced by various groups of factors, such as the transition from agricultural to non-agricultural jobs (Liu et al., 2014), land plot characteristics (Yan et al., 2016; Zhang et al., 2011), as well as demographic characteristics such as age and education of household heads (Trieu et al., 2016; Nguyen et al., 2021).

With the aim of clarifying the impact of provincial authorities on household motivations in the issue of agricultural land abandonment, the analytical framework of this paper is proposed as shown in Figure 1.

Figure 1. Analytical Framework

Source: Authors’ Research

3. Research Methodology

3.1. Data

The data set used in the research is compiled from the Vietnam Access to Resources Household Survey (VARHS) data from 2014 to 2020. These surveys are conducted biennially and are coordinated by the Central Institute for Economic Management (CIEM), the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), the Institute of Labor Science and Social Affairs (ILSSA), and the University of Copenhagen (Denmark). The VARHS dataset includes important information on various aspects of the living and production conditions of rural households in Vietnam.

The scope of the survey includes households in 12 provinces, representing Vietnam’s economic regions, including: Lào Cai, Điện Biên, Lai Châu, Phú Thọ, Hà Nội, Nghệ An, Quảng Nam, Lâm Đồng, Đắk Lắk, Đắk Nông, Khánh Hòa, and Long An.

3.2. Model and Estimation Method

Assuming the level of agricultural land abandonment by households, denoted by 𝑌, is represented as follows:

𝑌 = 𝛼 + 𝑋 ′𝛽 + 𝑢

where 𝑋 is the vector of factors affecting the level of land abandonment, 𝑢 is a random error following a normal distribution; 𝛼, 𝛽 are parameters to be estimated.

When using the Generalized Linear Models (GLM) method to estimate model (1), an assumption that needs to be satisfied is that the observations must be independent of each other. However, when estimating with panel data, this condition is often not satisfied, as observations belonging to the same subject often have a dependent structure.

Therefore, this method does not achieve high accuracy in estimation. In model (1), the components of the dependent variable vector Y may be dependent on each other, as the behavior of land abandonment by households is correlated between years. For example, if a household has labor that has transitioned to non-agricultural jobs but still wants to keep land as a livelihood reserve, the rate of land abandonment will not differ much between years, leading to autocorrelation.

The Generalized Estimating Equations (GEE) method, proposed by Liang and Zeger (1986), is suggested to address this issue by considering the correlation structure when estimating parameters.

The strength of GEE is that it allows for the estimation of overall model parameters in the presence of a dependent structure without requiring assumptions about the data distribution, increasing estimation accuracy when there is autocorrelation between the components of the dependent variable vector.

In empirical research, GEE is often used in cases where data is repeatedly surveyed on the same subject and where there is a basis to believe that autocorrelation exists in the dependent variable.

1. Research Results

Table 1. Variable definitions and explanations

Source: Authors’ Research

The explanatory variables in model (1) are described in Table 1.

Among the explanatory variables, GOV, GOV₁, GOV₂, and GOV₃ are the main independent variables, reflecting the role of provincial authorities in agricultural land abandonment from different aspects. GOV is a composite index, reflecting overall capacity improvement; GOV₁, GOV₂, and GOV₃ respectively represent land access, transparency, and dynamism of provincial authorities – which are sub-indices of the composite index evaluating provincial competitiveness.

The simultaneous use of both the composite index and its sub-indices allows a comprehensive view of the role of provincial authorities, as they not only help improve the general socio-economic environment but also directly impact the agricultural land market.

For example, transparency in the execution of local land use planning tasks, or in the process of issuing land use certificates, can help ensure legality and facilitate people in agricultural land use rights transactions. Additionally, the dynamism of authorities in proposing appropriate solutions to promote connections between people and partners in agricultural land rental transactions also plays an important role, contributing to increasing the efficiency of land use and reducing land abandonment.

Regarding the estimation method, this paper uses the GEE (Generalized Estimating Equations) model with a logit function for estimation. This is because the decision to abandon farmland is a self-selection, influenced by the household’s perspectives and perceptions of agricultural livelihoods, which can lead to correlation in the land abandonment rate variable between survey periods.

Additionally, as the value of the dependent variable ranges within [0;1], the authors estimate the GEE model with a logit function, which also helps to eliminate the issue of endogeneity that may occur with conventional linear functions.

Furthermore, since GOV₁ and GOV₂ are sub-indices of the composite index evaluating provincial competitiveness, to eliminate multicollinearity issues, the authors estimate model (1) with two groups of main independent variables as follows:

(i) Model (A) includes the GOV variable;

(ii) Model (B) includes the GOV₁, GOV₂, and GOV₃ variables.

Apart from this difference, both models (A) and (B) use the same list of control variables as described in Table 1, including: edu, age, off-farm, income, dist, Soil_quality, area, and year.

Some basic statistics of the variables are reported in Table 2 below.

Table 2. Descriptive statistics of variables

Source: Authors’ Research

The Wooldridge test indicates that model (1) has autocorrelation issues (see Appendix), which is consistent with the notion that land abandonment is due to the self-selection process of households. Autocorrelation may occur in the dependent variable, and the GEE method is appropriate for use. The estimation results of model (1) using the GEE method are reported in Table 3.

Bảng 3. Estimated results

Note: Numbers in parentheses are standard errors; the symbols *, **, and *** indicate significance levels of 10%, 5%, and 1%, respectively.

Source: Authors’ Research

The estimation results yield the following observations:

The coefficient of GOV in model (A) and the coefficients of the variables GOV₁, GOV₂, and GOV₃ in model (B) are all negative and statistically significant. This result shows that the improvement in the capacity of provincial authorities contributes to reducing the rate of agricultural land abandonment by households. This result is consistent with the conclusions from related studies on the role of provincial authorities in the effectiveness of agricultural land markets, such as Deininger et al. (2014) and Trieu et al. (2016).

The coefficients of the variables GOV₁, GOV₂, and GOV₃ in model (B) – which are sub-indices of the composite capacity index – show that land access and stability in land use planning, as well as transparency and dynamism of provincial authorities, play a positive role in managing and regulating the agricultural land market. This result aligns with expectations about the importance of transparency and pioneering dynamism in performing land management functions of provincial authorities, as well as specific measures by authorities to improve land access and stability in local land use planning.

For example, transparency in managing and implementing legal procedures on land can help ensure trust and facilitate agricultural land use rights transactions; or the dynamism and pioneering spirit of grassroots authorities can help support people and organizations in seeking information, connecting, and cooperating, thereby promoting the development of the agricultural land market and contributing to improving the situation of land abandonment.

For the remaining variables, the estimated coefficients in both models (A) and (B) are similar in sign, magnitude, and statistical significance, showing the impact of other factors on the dependent variable, as follows:

The coefficient of the edu_2 variable is positive and statistically significant, indicating that the education level of household heads affects the level of land abandonment. Households with heads having an education level from junior high school to high school have a higher average level of land abandonment compared to those with heads having an education level of primary school or below. This may be because household heads with higher education levels are more sensitive to job transition opportunities, thus having less interest in agricultural livelihoods. The coefficient of edu_3 is not statistically significant, so there is no evidence of this difference in households with heads having an education level from college or higher.

The estimated coefficients of the age_2 and age_3 variables in both models are negative, increasing in absolute value, and statistically significant. This shows the influence of age groups on land abandonment. Specifically, household heads in higher age groups, from 30 to 45 and from 45 to 60, have a lower rate of agricultural land abandonment compared to those under 30.

This result aligns with the expectation that older age groups are more attached to agricultural livelihoods than younger groups, and they also find it more challenging to transition to non-agricultural jobs compared to younger groups, resulting in lower levels of land abandonment. The coefficient of age_4 is not statistically significant, so there is no evidence of differences for those over 60 compared to other groups.

The coefficient of the off-farm variable is positive and statistically significant, indicating that an increase in the proportion of non-agricultural employment and income raises the rate of agricultural land abandonment. As mentioned, transitioning to non-agricultural jobs takes away the time that laborers in the household would otherwise spend on agricultural production. Moreover, the household’s interest in agricultural livelihoods may also decrease, leading to a higher rate of agricultural land abandonment.

Regarding the control variables that impact land plot characteristics on abandonment levels, the estimation results generally align with expectations, specifically:

– The coefficient of dist is positive and statistically significant, indicating that the greater the average distance to the land plot, the higher the rate of agricultural land abandonment.

– The coefficient of the soil_quality variable is positive and statistically significant, indicating that soil quality affects abandonment levels. Higher proportions of poor-quality agricultural land are less likely to be used for cultivation.

– Finally, the coefficient of the area variable is positive and statistically significant, showing that the abandonment rate depends on the amount of agricultural land owned by the household, with larger land holdings correlating with higher abandonment levels.

Lastly, the coefficients of the year_16, year_18, and year_20 variables are all positive and statistically significant. Notably, the coefficient magnitude of the year_18 variable is significantly larger than that of year_16, indicating that the level of agricultural land abandonment by households has been increasing over time. This aligns with the pace of industrialization in Vietnam in recent years.

The estimated coefficient of year_20 is not significantly different in magnitude from that of year_18, suggesting no difference between 2018 and 2020 in terms of land abandonment over time. This could be due to the economic impact of the Covid-19 pandemic in 2020, as people’s expectations for economic growth declined during that year, leading to increased interest in agricultural production for stable income during the pandemic period.

III. Conclusion and Recommendations

This paper provides empirical evidence to affirm the positive role and influence of provincial authorities on the motivation of farming households to improve the situation of agricultural land abandonment in Vietnam. In the context of increasing labor transition to non-agricultural jobs, recognizing factors that help reduce the wastage of agricultural land use is essential for achieving higher production efficiency.

The research results show that improving the capacity of provincial authorities is significant. By providing information, creating connections, promoting cooperation, and ensuring legality, provincial authorities can effectively support agricultural land use rights transactions, helping to improve the current situation of agricultural land abandonment.

However, this support in practice originates from the proactivity and flexibility of local government leaders in addressing emerging practical issues. There is still a lack of necessary regulations, guidelines, and legal frameworks for local authorities to effectively perform this role.

To enhance the role of local authorities in managing and promoting the development of the agricultural land market, the involvement of the entire political system from central to local levels is required. 

– First, there should be specific and consistent policies to remove barriers to the operation and development of the agricultural land market, such as regulations on recipients of agricultural land use rights, limits on transfers, related taxes and fees,… which need to be reviewed and adjusted to suit the reality.

– Second, it is necessary to improve the management capacity and expertise of local officials, while having an appropriate mechanism to arrange specialized staff for managing and regulating the agricultural land market.

– Third, there should be a specific roadmap to realize the policy of establishing an agricultural land bank, associated with the management duties and functions of local authorities. Generally, with the role of managing socio-economic activities in the area, local authorities have many advantages over other social organizations in gathering information, ensuring legality, and creating public trust in agricultural land use rights transactions.

– Fourth, there needs to be a monitoring mechanism to prevent potential negative occurrences, ensuring transparency in the activities of authorities in implementing the tasks of managing and regulating the agricultural land market.

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Appendix: Autocorrelation Test for Model

(1) Wooldridge test for autocorrelation in panel data

H0: no first-order autocorrelation

F(1, 1239) = 0.031

Prob > F = 0.8608

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