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Agriculture and Income Distribution in Rural Vietnam under Economic Reforms: A Tale of Two Regions

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  • Dwayne Benjamin
  • Loren Brandt

Abstract

This paper exploits the panel dimension of the Vietnam Living Standards Survey (VLSS) in order to analyze the main changes occurring in agriculture in Vietnam over the period 1993-1998. This period was marked by a continuation of the reforms that began in 1988 with the implementation of Resolution 10, Vietnam s own version of the Chinese Household Responsibility System. We focus on the impact of two main policy changes: first, the increase in the rice export quota and the significant increase in the price of rice, especially in the south; and second, the liberalization of the fertilizer market and the sharp drop in the price of fertilizer. To this end, we document changes in the empirically observable institutional environment, exploring changes in rice and other crop prices as well as fertilizer prices. With this as background, we examine changes in rice production, consumption and marketing, and their links to changes in prices and incomes. We also estimate the degree to which these increases can be explained by increased use of inputs like fertilizer, cropping intensity, and increased yields. Finally, we investigate the distributional impacts of these changes, including a detailed examination of the linkages between rice marketing and income distribution using nonparametric econometric techniques. We find that the agricultural reforms had a largely beneficial impact on the well being of rural households throughout Vietnam, but that farmers in the south gained most, consistent with expectations given the policy changes. More generally, our conclusions suggest that market reforms can have a significant impact on incentives, without adverse consequences for income distribution.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number benjamin-02-01.

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Length: 56 pages
Date of creation: 11 Mar 2002
Date of revision:
Handle: RePEc:tor:tecipa:benjamin-02-01

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Keywords: economic reforms in Vietnam; trade liberalization; agricultural productivity; welfare distribution;

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References

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  1. Goletti, Francesco & Minot, Nicholas, 1997. "Rice markets, agricultural growth, and policy options in Viet Nam," MTID discussion papers 14, International Food Policy Research Institute (IFPRI).
  2. Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 311-26, May.
  3. Dwayne Benjamin & Loren Brandt & Paul Glewwe & Li Guo, 2000. "Markets, Human Capital, and Inequality: Evidence from Rural China," William Davidson Institute Working Papers Series 298, William Davidson Institute at the University of Michigan.
  4. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
  5. Nicholas Minot & Francesco Goletti, 1998. "Export Liberalization and Household Welfare: The Case of Rice in Vietnam," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 738-749.
  6. Goletti, Francesco & Minot, Nicholas & Berry, Philippe, 1997. "Marketing constraints on rice exports from Viet Nam," MTID discussion papers 15, International Food Policy Research Institute (IFPRI).
  7. Deaton, Angus, 1989. "Rice Prices and Income Distribution in Thailand: A Non-parametric Analysis," Economic Journal, Royal Economic Society, vol. 99(395), pages 1-37, Supplemen.
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