How Does Viet Nam's Accession to the World Trade Organization Change the Spatial Incidence of Poverty?
UNU-WIDER Research Paper No. 2007/12
42 Pages Posted: 31 Mar 2007
Date Written: March 2007
Trade policies can promote aggregate efficiency, but the ensuing structural adjustments generally create both winners and losers. From an incomes perspective, trade liberalization can raise GDP per capita, but rates of emergence from poverty depend upon individual household characteristics of economic participation and asset holding. To more fully realize the growth potential of trade, while limiting the risk of rising inequality, policies need to better account for microeconomic heterogeneity. One approach to this is the geographic targeting, which shifts resources to poor areas. This study combines an integrated microsimulation-CGE model with the small area estimation to estimate the spatial incidence of Viet Nam's accession to the World Trade Organization. Provincial-level poverty reduction after full liberalization was heterogeneous, ranging from 2.2% to 14.3%. Full liberalization will benefit the poor on a national basis, but northwestern area of Viet Nam is likely to lagged behind. Furthermore, poverty can be shown to increase under comparable scenarios.
Keywords: Trade liberalization, microsimulation, computational general equilibrium, small-area estimation, Viet Nam
JEL Classification: C68, F15, I32, O53
Suggested Citation: Suggested Citation