Technical Efficiency and Returns to Scale in Vietnam’s Agriculture: Stochastic Output Distance Function Approach

Duc-Tri Tran, Nguyen To-The, Viet-Anh Dao, Tuan Nguyen-Anh, Linh Nguyen-Thi-Thuy, Ashfaq Ahmad Shah, Huong Nguyen-Thi-Lan

Abstract

The purpose of this study is to analyze the effects of technical efficiency (TE) and return to scale on Vietnamese agriculture using panel data. This study employs a stochastic output distance function technique applied to panel data collected from 487 households over five surveys. This approach is used to investigate TE, its determinants, technical change, and return to scale in Vietnamese agriculture. The overall technical efficiency is 89.29%, with variations in efficiency observed across provinces. Household and plot sizes positively and significantly affect efficiency, whereas ethnicity of household heads negatively impacts efficiency, with the average rate of technical change decreasing by 4.43%. The returns to scale are currently at 0.78, indicating an increase. TE growth has been declining, with an average annual decline of 2.71%. The findings suggest that to boost agricultural productivity, there is a need for collaboration between farmers and the government to improve technical efficiency, adapt agricultural practices, and achieve a more efficient scale of operation. This study provides a detailed analysis of the determinants of TE and return to scale in Vietnamese agriculture using panel data, highlighting the significant impact of household characteristics and offering insights into the decline in annual TE growth.

 

Keywords: technical efficiency, stochastic output distance function, Vietnamese agriculture.

 

DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.63.20


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