Land-Market Adjustment During Economic Transition: A Case Study for Vietnam

Abstract: While liberalizing key factor markets is a crucial step in the transition from a socialist control-economy to a market economy, resistance from entrenched interests and concerns about risk and rising inequality can stall the process. The paper studies how market and non-market forces interacted to influence agricultural land allocation in the wake of Vietnam’s reforms aiming to establish a free market in land-use rights following de-collectivization. Our econometric tests using a farm-household panel data set spanning the reforms suggest that land allocation responded efficiently, but that the response was tempered by the local political economy, which operated to assure greater equity than would have been possible otherwise