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The role of services in rural income : the case of Vietnam

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  • Aksoy, M. Ataman
  • Isik-Dikmelik, Aylin
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    Abstract

    This paper investigates the role of services in the household response to trade reforms in Vietnam. The relative response of the households and income growth after a major trade liberalization in rice are analyzed aiming to answer the following questions: What type of households, in which locations, having access to what type of services, benefited more from the reforms? It focuses on services that have an impact on transaction costs (roads or quality of roads, public transportation, access to credit, extension services, and availability of markets in communication services) because transaction costs are often cited as a barrier to rural households in responding to the price changes and increased incentives offered by trade and other policy reforms. The results suggest that availability of production related services contributes positively to the impact of trade reforms. Although most of the service variables have a positive and significant effect on growth in income, some that are expected to have an impact are not significant. This may be explained by the exceptional coverage of infrastructure services in Vietnam even before the reforms. When service availability is very similar across different localities, household characteristics become more important in determining the response.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4180.

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    Date of creation: 01 Mar 2007
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    Handle: RePEc:wbk:wbrwps:4180

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    Keywords: Transport Economics Policy&Planning; Rural Poverty Reduction; Economic Theory&Research; Housing&Human Habitats;

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    1. Dercon, Stefan, 2006. "Economic reform, growth and the poor: Evidence from rural Ethiopia," Journal of Development Economics, Elsevier, Elsevier, vol. 81(1), pages 1-24, October.
    2. Van der Walle, Dominique & Cratty, Dorothyjean, 2003. "Is the emerging nonfarm market economy the route out of poverty in Vietnam?," Policy Research Working Paper Series 2950, The World Bank.
    3. Dwayne Benjamin & Loren Brandt, 2002. "Agriculture and Income Distribution in Rural Vietnam under Economic Reforms: A Tale of Two Regions," Working Papers benjamin-02-01, University of Toronto, Department of Economics.
    4. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
    5. Reimer, Jeffrey J., 2002. "Estimating the poverty impacts of trade liberalization," Policy Research Working Paper Series 2790, The World Bank.
    6. Irene Brambilla & Guido G. Porto, 2005. "Farm Productivity and Market Structure. Evidence From Cotton Reforms in Zambia," Working Papers, Economic Growth Center, Yale University 919, Economic Growth Center, Yale University.
    7. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(409), pages 1400-417, November.
    8. Irene Brambilla & Guido Porto, 2005. "Market Structure, Outgrower contracs and Farm Output. Evidence from Cotton Reforms in Zambia," NBER Working Papers 11804, National Bureau of Economic Research, Inc.
    9. Yoko Niimi & Puja Vasudeva Dutta & Alan Winters, 2003. "Trade Liberalisation and Poverty Dynamics in Vietnam," PRUS Working Papers, Poverty Research Unit at Sussex, University of Sussex 17, Poverty Research Unit at Sussex, University of Sussex.
    10. Isik-Dikmelik, Aylin, 2006. "Trade reforms and welfare : an ex-post decomposition of income in Vietnam," Policy Research Working Paper Series 4049, The World Bank.
    11. Porto, Guido G., 2003. "Trade reforms, market access, and poverty in Argentina," Policy Research Working Paper Series 3135, The World Bank.
    12. Balat, Jorge F. & Porto, Guido G., 2005. "The WTO Doha Round, cotton sector dynamics, and poverty trends in Zambia," Policy Research Working Paper Series 3697, The World Bank.
    13. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
    14. Diop, Ndiame & Brenton, Paul & Asarkaya, Yakup, 2005. "Trade costs, export development, and poverty in Rwanda," Policy Research Working Paper Series 3784, The World Bank.
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