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Trade reforms and welfare : an ex-post decomposition of income in Vietnam

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  • Isik-Dikmelik, Aylin

Abstract

This paper analyzes the impact of trade reforms on household welfare. In particular, it studies the importance of each of the links that together constitute the impact using data from the Vietnamese experience in the 1990s. The implementation of trade reforms in the 1990s, most noteworthy of which was the liberalization of rice, resulted in substantial improvement in welfare as evidenced by the drastic decline in poverty. Using analytical and empirical methods, the author examines the role of each channel (direct versus indirect) in this improvement for different groups of households. Results indicate that the growth has been broad based and pro-poor. Poorer households experienced more growth for each and every group analyzed. And contrary to the standard literature, net buyer households had more growth compared with net sellers, emphasizing the importance of indirect links. Decomposition of the growth shows that for rural households, both the direct effect and the multiplier effect drive growth while the multiplier effect was key in urban areas. The importance of the secondary effects underscores the need for a broader model to estimate the impact of trade reforms fully.

Suggested Citation

  • 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.
  • Handle: RePEc:wbk:wbrwps:4049
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    References listed on IDEAS

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    1. Yoko Niimi & Puja Vasudeva Dutta & L. Alan Winters, 2015. "Trade Liberalisation and Poverty Dynamics in Vietnam," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 16, pages 333-365 World Scientific Publishing Co. Pte. Ltd..
    2. JULIE LITCHFIELD & NEIL McCULLOCH & L. ALAN WINTERS, 2015. "Agricultural Trade Liberalization And Poverty Dynamics In Three Developing Countries," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 17, pages 367-373 World Scientific Publishing Co. Pte. Ltd..
    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.
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    6. Porto, Guido G., 2003. "Trade reforms, market access, and poverty in Argentina," Policy Research Working Paper Series 3135, The World Bank.
    7. Dercon, Stefan, 2006. "Economic reform, growth and the poor: Evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 81(1), pages 1-24, October.
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    11. Minot, Nicholas & Goletti, Francesco, 2000. "Rice market liberalization and poverty in Viet Nam:," Research reports 114, International Food Policy Research Institute (IFPRI).
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    Cited by:

    1. Aksoy, M. Ataman & Isik-Dikmelik, Aylin, 2007. "The role of services in rural income : the case of Vietnam," Policy Research Working Paper Series 4180, The World Bank.
    2. Aksoy , M. Ataman & Isik-Dikmelik, Aylin, 2008. "Are low food prices pro-poor ? net food buyers and sellers in low-income countries," Policy Research Working Paper Series 4642, The World Bank.

    More about this item

    Keywords

    Rural Poverty Reduction; Economic Theory&Research; Small Area Estimation Poverty Mapping; Inequality; Consumption;

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