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

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  • Tarp Jensen, Henning
  • Tarp, Finn

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.

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File URL: http://www.wider.unu.edu/sites/default/files/rp2004-35.pdf
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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper RP2004/35.

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Length: 24 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:unu:wpaper:rp2004-35
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Keywords: poverty; trade liberalization; general equilibrium models; Vietnam;

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  1. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Papers 9909, Laval - Recherche en Politique Economique.
  2. C. Arndt & H.T. Jensen & S. Robinson & F. Tarp, 2000. "Marketing Margins and Agricultural Technology in Mozambique," Journal of Development Studies, Taylor & Francis Journals, vol. 37(1), pages 121-137, October.
  3. Tarp Jensen, Henning & Tarp, Finn, 2004. "Trade Liberalization and Spatial Inequality: A Methodological Innovation in Vietnamese Perspective," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Yoko Niimi & Puja Vasudeva Dutta & Alan Winters, 2003. "Trade Liberalisation and Poverty Dynamics in Vietnam," PRUS Working Papers 17, Poverty Research Unit at Sussex, University of Sussex.
  5. Arndt, Channing & Robinson, Sherman & Tarp, Finn, 2002. "Parameter estimation for a computable general equilibrium model: a maximum entropy approach," Economic Modelling, Elsevier, vol. 19(3), pages 375-398, May.
  6. Golan, Amos & Judge, George & Robinson, Sherman, 1994. "Recovering Information from Incomplete or Partial Multisectoral Economic Data," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 541-49, August.
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Cited by:

  1. Mamoon, Dawood, 2007. "How May International Trade affect Poverty in a Developing Country Setup? The Inequality Channel," MPRA Paper 2716, University Library of Munich, Germany.
  2. Hertel, Thomas & Keeney, Roman & Ivanic, Maros & Winters, Alan, 2006. "Distributional Effects of WTO Agricultural Reforms in Rich and Poor Countries," GTAP Working Papers 2185, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  3. 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, 02.
  4. 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.
  5. Ravi Kanbur, 2005. "Spatial Inequality and Development: Overview of UNU-WIDER Project," Working Papers id:215, eSocialSciences.
  6. Nguyen, Anh & Jones, Nicola, 2006. "Vietnam’s Trade Liberalisation: Potential Impacts on Child Well-being," MPRA Paper 1385, University Library of Munich, Germany.
  7. Mustafa Babiker, . "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.
  8. 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.
  9. 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.
  10. Jensen, Tarp & Tarp, Finn, 2007. "Agricultural Technology and Marketing Margins in Vietnam," MPRA Paper 29820, University Library of Munich, Germany.
  11. Kundu, Amitabh, 2009. "Urbanisation and Migration: An Analysis of Trends, Patterns and Policies in Asia," MPRA Paper 19197, University Library of Munich, Germany.
  12. 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.
  13. Nguyen, Hoa & Grote, Ulrike, 2004. "Agricultural policies in Vietnam," MTID discussion papers 79, International Food Policy Research Institute (IFPRI).
  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. Jones, Nicola & Nguyen, Ngoc Anh & Nguyen, Thu Hang, 2007. "Trade liberalisation and intra-household poverty in Vietnam: a q2 social impact analysis," MPRA Paper 4206, University Library of Munich, Germany.
  16. 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.
  17. 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.
  18. Abbott, Philip & Bentzen, Jeanet & Huong, Thi Lan & Tarp, Finn, 2007. "A Critical Review of Studies on the Social and Economic Impacts of Vietnam’s International Economic Integration," MPRA Paper 29789, University Library of Munich, Germany.

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