Economic Impacts of Hybrid Rice Varieties in Vietnam: An Instrumental Analysis

Adoption of agricultural technology is important for improving rice yield and household income in developing countries. Using fixed effects, random effects, and Instrumental Variable/Two-Stage Least-Squares (IV/2SLS) methods, this study examined the economic impacts of agricultural technology adoption by focusing on the case of hybrid rice varieties in rural Vietnam. The empirical results revealed that hybrid varieties adoption significantly increased productivity but induced higher intermediate costs. Meanwhile, there was no significant impact of adoption on value added. In addition, poor adopters had higher productivity and incur more intermediate costs than non-poor adopters. The findings suggest that the Vietnamese government should enact relevant policies to enhance the farmers’ access to better inputs and the effectiveness of rice farming activities.