Agricultural Factor Misallocation and Land Rentals in Vietnam

ABSTRACT This paper investigates factor misallocation in Vietnam's cropping sector and its connection to land rental markets. It differentiates between market‐based transactions (i.e., those involving compensation) and nonmarket transfers (i.e., those conducted without payment, often among close relations). The analysis demonstrates that land rentals serve as a key mechanism for improving the allocation of agricultural resources. Crucially, the study finds that temporary land transfers enhance efficiency only when facilitated through market transactions. By highlighting the distinct impacts of market and nonmarket land transfers, this research provides a deeper understanding of how land rental markets influence agricultural productivity and resource allocation.