Agricultural Technology and Marketing Margins in Vietnam
This paper analyses the potential distributional impact and synergy effects from simultaneous improvements in agricultural sector productivity and reductions in trade and transportation margins. Two separate models are established to analyse (i) the interaction between agricultural technology and aggregate marketing margins in a Vietnamese context, and (ii) the relative importance of trade margins and transportation margins in explaining the importance of aggregate margins. The results show that a reduction in marketing margins is not a necessary complement for agricultural technology improvements to target welfare gains for rural households. Nevertheless, it remains a desirable complement since (i) it will allow for the reaping of significant synergy gains from interaction with agricultural productivity growth, and (ii) it will increase the targeting potential of agricultural productivity growth in terms of welfare improvements for poor rural households. Finally, the results show that a reduction in trade margins is a very potent instrument for reaping of synergy effects and targeting of rural household welfare. In contrast, transportation margins appear to be a surprisingly impotent instrument in these regards. 1
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