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Impacts of Rising Food Prices on Poverty and Welfare in Vietnam

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Author Info

  • Linh Vu Hoang

    ()
    (Center for Agricultural Policy, Institute of Policy and Strategy for Agriculture and Rural Development)

  • Paul Glewwe

    ()
    (Professor, Department of Applied Economics, University of Minnesota)

Abstract

This paper examines the impacts of rising food prices on poverty and welfare in Vietnam. Increases in food prices raise the real incomes of those selling food, but reduce the welfare of net food purchasers. Overall, the net impact of higher food prices on an average Vietnamese household's welfare is positive. However, the benefits and costs are not spread evenly across the population. A majority of the population would be worse off from increases in food prices. More specifically, a uniform increase in both food consumer and producer prices would reduce the welfare of 56 percent of Vietnamese households. Similarly, a uniform increase in the price of rice would reduce the welfare of about 54 percent of rural households and about 92 percent of urban households. The reason why average household welfare increases is that the average welfare loss of the households whose welfare declines (net purchasers) is smaller than the average welfare gain of the households whose welfare increases (net sellers). A relatively small increase in food prices reduces poverty rate slightly because poorer households in Vietnam tend to be net sellers. However, a large food price increase, for example a 50 percent increase, may increase the poverty rate.

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Bibliographic Info

Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 13.

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Length: 35 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:dpc:wpaper:1309

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Keywords: Vietnam poverty rate;

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  1. von Braun, Joachim, 2008. "Food and financial crises: Implications for agriculture and the poor," Food policy reports 20, International Food Policy Research Institute (IFPRI).
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Cited by:
  1. Coxhead, Ian & Linh, Vu Hoang & Le, Dong Tam, 2011. "Global Market Shocks and Poverty in Vietnam: The Case of Rice," Staff Paper Series 559, University of Wisconsin, Agricultural and Applied Economics.
  2. John Gibson & Bonggeun Kim, 2012. "Do the Urban Poor Face Higher Food Prices? Evidence from Vietnam," Working Papers in Economics 12/16, University of Waikato, Department of Economics.
  3. Bryan, Shane, 2013. "A cacophony of policy responses: Evidence from fourteen countries during the 2007/08 food price crisis," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Ivanic, Maros & Martin, Will & Zaman, Hassan, 2012. "Estimating the Short-Run Poverty Impacts of the 2010–11 Surge in Food Prices," World Development, Elsevier, vol. 40(11), pages 2302-2317.
  5. Emiliano Magrini & Pierluigi Montalbano, 2012. "Trade openness and vulnerability to poverty: Vietnam in the long-run (1992-2008)," Working Paper Series 3512, Department of Economics, University of Sussex.
  6. John Gibson & Bonggeun Kim, 2011. "Quality, Quantity and Nutritional Impact of Rice Price Changes in Vietnam," Working Papers in Economics 11/16, University of Waikato, Department of Economics.
  7. Manh Hai, Nguyen & Talbot, Theodore, 2013. "The political economy of food price policy: The case of rice prices in Vietnam," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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