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Trade Liberalization and Spatial Inequality: a Methodological Innovation in a Vietnamese Perspective

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  • Henning Tarp Jensen
  • Finn Tarp

Abstract

The authors calibrate two static computable general-equilibrium (CGE) models with 16 and 5999 representative households. Aggregated and disaggregated household categories are consistently embedded in a 2000 social accounting matrix (SAM) for Vietnam, mapping on a one-to-one basis. Distinct differences in poverty assessments emerge when the impact of trade liberalization is analyzed in the two models. This highlights the importance of modeling micro-household behavior and related income and expenditure distributions endogenously within a static CGE model framework. The simulations indicate that poverty will rise following a revenue-neutral lowering of trade taxes. This is interpreted as a worst-case scenario, which suggests that the government should be proactive in combining trade liberalization measures with a pro-poor fiscal response to avoid increasing poverty in the short to medium term. Copyright United Nations University 2005.

Suggested Citation

  • Henning Tarp Jensen & Finn Tarp, 2005. "Trade Liberalization and Spatial Inequality: a Methodological Innovation in a Vietnamese Perspective," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 69-86, February.
  • Handle: RePEc:bla:rdevec:v:9:y:2005:i:1:p:69-86
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    Citations

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    Cited by:

    1. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2006. "Vietnam’s Accession to the WTO: Lessons from Past Trade Agreements," MPRA Paper 61679, University Library of Munich, Germany.
    2. Thi Cam Van Cao & Takahiro Akita, 2008. "Urban and Rural Dimensions of Income Inequality in Vietnam," Working Papers EMS_2008_04, Research Institute, International University of Japan.
    3. Thomas W. Hertel & Roman Keeney & Maros Ivanic & L. Alan Winters, 2007. "Distributional effects of WTO agricultural reforms in rich and poor countries," Economic Policy, CEPR;CES;MSH, vol. 22, pages 289-337, April.
    4. Dawood Mamoon, 2015. "How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(5), pages 230-244, May.
    5. Jeong-Soo OH & Phouphet Kyophilavong, 2015. "Trade Liberalization and Poverty in Developing Countries: Literature Survey," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(2), pages 86-94, Fabruary.
    6. Kundu, Amitabh, 2009. "Urbanisation and Migration: An Analysis of Trends, Patterns and Policies in Asia," MPRA Paper 19197, University Library of Munich, Germany.
    7. Pieters, Janneke, 2010. "Growth and Inequality in India: Analysis of an Extended Social Accounting Matrix," World Development, Elsevier, vol. 38(3), pages 270-281, March.
    8. Jensen, Tarp & Tarp, Finn, 2007. "Agricultural Technology and Marketing Margins in Vietnam," MPRA Paper 29820, University Library of Munich, Germany.
    9. Abbott, Philip & Bentzen, Jeanet & Tarp, Finn, 2009. "Trade and Development: Lessons from Vietnam's Past Trade Agreements," World Development, Elsevier, vol. 37(2), pages 341-353, February.
    10. Kanbur, Ravi & Venables, Anthony J., 2005. "SPATIAL INEQUALITY AND DEVELOPMENT Overview of UNU-WIDER Project," Working Papers 127127, Cornell University, Department of Applied Economics and Management.
    11. Nguyen, Hoa & Grote, Ulrike, 2004. "Agricultural policies in Vietnam," MTID discussion papers 79, International Food Policy Research Institute (IFPRI).
    12. 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.
    13. Mustafa Babiker, "undated". "Impacts of Public Policy on Poverty in Arab Countries:Review of the CGE Literature," API-Working Paper Series 0403, Arab Planning Institute - Kuwait, Information Center.
    14. Channing Arndt & Sherman Robinson & Finn Tarp, 2006. "Trade Reform and Gender in Mozambique," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 32, pages 73-89.
    15. Tarp Jensen, Henning & Tarp, Finn, 2004. "Trade Liberalization and Spatial Inequality: A Methodological Innovation in Vietnamese Perspective," WIDER Working Paper Series 035, World Institute for Development Economic Research (UNU-WIDER).
    16. Nguyen, Anh & Jones, Nicola, 2006. "Vietnam’s Trade Liberalisation: Potential Impacts on Child Well-being," MPRA Paper 1385, University Library of Munich, Germany.

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