How Does Vietnam's Accession To The World Trade Organization Change The Spatial Incidence Of Poverty?

Abstract

Trade policies can promote aggregate efficiency, but the ensuing structural adjustments generally create both winners and losers. From an incomes perspective, trade liberalization can raise GDP per capita, but rates of emergence from poverty depend upon individual household characteristics of economic participation and asset holding. To fully realize the growth potential of trade, while limiting the risk of rising inequality, policies need to better account for microeconomic heterogeneity. One approach to this is the geographic targeting, which shifts resources to poor areas. This study combines an integrated microsimulation-CGE model with the small area estimation to evaluate the spatial incidence of Vietnam's accession to the WTO. Provincial-level poverty reduction after full liberalization was heterogeneous, ranging from 2.2 per cent to 14.3 per cent. Full liberalization will benefit the poor on a national basis, but the northwestern area of Vietnam is likely to lag behind. Furthermore, poverty can be shown to increase under comparable scenarios.

Impacts of Trade Liberalisation Commitments on the Vietnamese Economy: A CGE Approach

“…Our finding is consistent withFujii and Roland-Holst (2007).25 One of the examples is the deterioration of rural services, such as rural-based banks.…”

Households’ vulnerability from trade in Vietnam

“…Over the first ten years after the adoption of the "Doi Moi" (renovation), a combination of stabilization, liberalisation and structural reforms, the annual average growth rate of Vietnam's merchandise exports boomed at 25 per cent (1986)(1987)(1988)(1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996), and it fell only to 18.5 per cent in the subsequent decade (1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006). An extensive empirical literature highlights the importance of this trade surge on the Vietnamese economy, identifying the positive correlations between trade liberalisation, growth and poverty reduction (Irvin, 1997;Fritzen, 2002;Jenkins, 2004;Nadvi et al, 2004;van de Walle & Cratty, 2004;Jensen & Tarp, 2005;Nguyen & Ezaki, 2005;Fujii & Roland-Holst, 2008;Niimi et al, 2007;Abbott et al, 2009 ;Heo & Doanh, 2009;Coello et al, 2010;Hoang et al, 2016). i The growth of average income is obviously hugely important to economic welfare, but even for an individual household it is not the only thing that matters.…”

Trade Liberalisation and Poverty Reduction in Vietnam

“…To date, a number of studies have investigated the linkages between trade and poverty in Vietnam (e.g. Irvin, 1997; Liu, 2001; Fritzen, 2002; Jenkins, 2004a; Nadvi et al., 2004; van de Walle and Cratty, 2004; Jensen and Tarp, 2005; Nguyen and Ezaki, 2005; Fujii and Roland‐Holst, 2007). They show contrasting results.…”