ERIC Number: ED444807
Record Type: Non-Journal
Publication Date: 2000-Aug
Reference Count: N/A
Are Returns to Investment Lower for the Poor? Human and Physical Capital Interactions in Rural Vietnam. Policy Research Working Papers.
van de Walle, Dominique
Unless disparities in education are addressed, market-oriented reforms in Vietnam will generate inequitable agricultural growth. It is argued that if the marginal gains from investment in physical capital depend positively on knowledge, but a household cannot hire skilled labor to compensate for low skills, then even if it has access to credit, the household will achieve lower returns than an educated household. If, as is common, the income-poor are less well educated because of credit market failure and living in areas with worse access to schooling, then the poor will also have lower returns to investment. This paper tests the argument using the case of irrigation infrastructure in rural Vietnam. It asks how a household's education level and demographics influence the household income gains from irrigating previously non-irrigated land. Analysis of data from the 1992-93 Vietnam Living Standards Survey on 3,049 farm households found that education variables had pronounced and significant positive impacts on crop income. Modeling the determinants of crop income uncovered evidence of strong complementarities between the returns to irrigation and household education, particularly primary education. Simulated effects of increased education indicate that gains would accrue primarily to the poor and would have a strong equalizing effect on the returns to irrigation investment. Implications for rural development strategies are discussed. (Contains 20 references and 8 data tables and figures.) (SV)
Descriptors: Agriculture, Educational Attainment, Family Income, Foreign Countries, Labor Market, Poverty, Rural Areas, Rural Development, Rural Education, Rural Farm Residents
World Bank, 1818 H Street NW, Room MC2-609, Washington, DC 20433; Tel: 202-473-7698. Full text at Web site: http://www.worldbank.org/research, click on "education."
Publication Type: Reports - Research
Education Level: N/A
Authoring Institution: World Bank, Washington, DC.
Identifiers - Location: Vietnam