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Long-run impacts of China's WTO accession on farm-nonfarm income inequality and rural poverty

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  • Anderson, Kym
  • Huang, Jikun
  • Ianchovichina, Elena

Abstract

Many fear China's accession to the World Trade Organization (WTO) will impoverish its rural people by way of greater import competition in its agricultural markets. Anderson, Huang, and Ianchovichina explore that possibility bearing in mind that, even if producer prices of some (land-intensive) farm products fall, prices of other (labor-intensive) farm products could rise. Also, the removal of restrictions on exports of textiles and clothing could boost town and village enterprises, so demand for unskilled labor for nonfarm work in rural areas may grow even if demand for farm labor in aggregate falls. New estimates, from the global economywide numerical simulation model known as GTAP, of the likely changes in agricultural and other product prices as a result of WTO accession are drawn on to examine empirically the factor reward implications of China's WTO accession. The results suggest farm-nonfarm and Western-Eastern income inequality may well rise in China but rural-urban income inequality need not. The authors conclude with some policy suggestions for alleviating any pockets of farm household poverty that may emerge as a result of WTO accession.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3052.

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Date of creation: 31 May 2003
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Handle: RePEc:wbk:wbrwps:3052

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Keywords: Economic Theory&Research; Agricultural Knowledge&Information Systems; Labor Policies; Environmental Economics&Policies; Markets and Market Access; Environmental Economics&Policies; Crops&Crop Management Systems; Economic Theory&Research; World Trade Organization; Livestock&Animal Husbandry;

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References

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  1. Anderson, Kym, 1993. "Lobbying Incentives and the Pattern of Protection in Rich and Poor Countries," CEPR Discussion Papers 789, C.E.P.R. Discussion Papers.
  2. Kala Krishna & Cemile Yavas, 2002. "When Does Trade Hurt? Market, Transition and Developing Economies," NBER Working Papers 8995, National Bureau of Economic Research, Inc.
  3. W. Jill Harrison & K.R. Pearson, 1994. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Centre of Policy Studies/IMPACT Centre Working Papers ip-64, Victoria University, Centre of Policy Studies/IMPACT Centre.
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  6. Scott Rozelle & Albert Park & Jikun Huang & Hehui Jin, 1997. "Liberalization and Rural Market Integration in China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 635-642.
  7. Hazell, Peter B. R. & Haddad, Lawrence James, 2001. "Agricultural research and poverty reduction," 2020 vision briefs 70, International Food Policy Research Institute (IFPRI).
  8. Fan, Shenggen & Fang, Cheng & Zhang, Xiaobo, 2001. "How agricultural research affects urban poverty in developing countries: the case of China," EPTD discussion papers 83, International Food Policy Research Institute (IFPRI).
  9. Shaohua Chen & Martin Ravallion, 2004. "Welfare Impacts of China's Accession to the World Trade Organization," World Bank Economic Review, World Bank Group, vol. 18(1), pages 29-57.
  10. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September.
  11. Anderson,Kym (ed.), 1992. "The New Silk Roads," Cambridge Books, Cambridge University Press, number 9780521392785, November.
  12. Will Martin, 2001. "Implications of reform and WTO accession for China' agricultural policies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(3), pages 717-742, November.
  13. Anderson, Kym & Yao, Shunli, 2002. "China, GMOs and World Trade in Agricultural and Textile Products," CEPR Discussion Papers 3171, C.E.P.R. Discussion Papers.
  14. Winters, L. Alan, 2000. "Trade, Trade Policy and Poverty: What Are The Links?," CEPR Discussion Papers 2382, C.E.P.R. Discussion Papers.
  15. Ianchovichina, Elena & Martin, William, 2003. "Economic impacts of China's accession to the World Trade Organization," Policy Research Working Paper Series 3053, The World Bank.
  16. Terry Sicular & Yaohui Zhao, 2002. "Earnings and Labor Mobility in Rural China: Implications for China's WTO Entry," University of Western Ontario, Economic Policy Research Institute Working Papers 20028, University of Western Ontario, Economic Policy Research Institute.
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Citations

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Cited by:
  1. Shalizi, Zmarak, 2006. "Addressing China's growing water shortages and associated social and environmental consequences," Policy Research Working Paper Series 3895, The World Bank.
  2. Zhai, Fan & Hertel, Thomas & Wang, Zhi, 2003. "Labor Market Distortions, Rural-Urban Inequality and the Opening of China’s Economy," GTAP Working Papers 1323, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  3. McCalla, Alex F., 2003. "Liberalizing Agricultural Trade: Will It Ever Be a Reality?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December.
  4. Li, Yao, 2008. "Industrial Agglomeration and Wage Inequality in China," MPRA Paper 11426, University Library of Munich, Germany, revised Oct 2008.
  5. Duncan, Ronald C., 2004. "Achieving food security in China: Implications of WTO accession," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58402, Australian Agricultural and Resource Economics Society.

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