North versus South: The Impact of Social Norms in the Market Pricing of Private Property Rights in Vietnam

Seeds of Reform: Lessons from Vietnam about Informality and Institutional Change

“…Therefore, social structure plays a significant role in affecting the likelihood of who comes into contact with whom, who is deemed noticeable, and cultural modes of learning (Rogoff, 1990). I applied social cognition theory to study the transition to private 1 land and real estate markets in Vietnam, China, and Poland, examining both market transactions through econometric analysis and in-depth case studies of the first generation of real estate developers (Kim, 2006(Kim, , 2007(Kim, , 2008(Kim, , 2011a. Land and real estate is one of the earlier economic sectors to start transitioning because land is one of the more valuable assets in a transition country's early undercapitalized days.…”

“…Second, the way society is structured and networked influenced where and how quickly new ideas form and spread and whether new firms were able to gather enough appropriate human capital. For example, these differences retarded the formation of private firms in the northern city of Hanoi, relative to Ho Chi Minh City in the south (Kim, 2007). Third, some social trust or risk-taking propensity needed to exist in society in order for parties to move forward in new relationships and new types of transaction and for some predictability to develop around repeated workable transactions.…”

“…3 However, the market valuation of newly formed private property rights varies significantly between the two cities. Table 1 shows the major findings of hedonic price model analysis conducted of houses listed for sale in Hanoi and HCMC in different local editions of the same newspaper between March-June 2004 (Kim, 2007). The study took advantage of the norm that had developed in these ads to usually state the kind of documentation the seller was using to claim rightful ownership of the house.…”

“…What is particularly interesting about Vietnam is that while the country has been lauded for its recent rapid economic development, it can give us even more lessons about transition because of the variation in how quickly markets developed between regions and cities within Vietnam. In previous research, I found significant differences between the North and the South indicating that beyond formal, legal changes, local political economy and social norms have important effects on economic transition (Kim, 2007). This has particular resonance given the many differences that exist between the institutions and economic conditions of North and South Korea.…”

“…The more detailed discussion of the data in the original study presented descriptive statistics to show that the quality of the properties on the market did not differ fundamentally between the two cities, as well as other tests that were used to address the perennial endogeneity issue in hedonic price models(Kim, 2007).…”