In recent decades, there have been an increasingly large number of developing countries that have embraced external economic liberalisation policies. Following trade theory, trade liberalisation has the potential to increase employment elasticity of economic growth and hence, have a greater poverty reduction impact, compared to import-substitution or closed economies. However, critics of globalisation often emphasise that the benefits from growth may not be evenly spread; hence, the distributional impacts may have an adverse effect on the poor. Vietnam has undertaken major market-based reforms to transform itself into an outward-oriented economy. The resulting effects show that not only has Vietnam achieved significant growth, but it has also managed to satisfy all the Millennium Development Goals. However, a significant element of Vietnams reforms involves integrating the Vietnamese economy with world markets through trade liberalisation policies, which may affect the welfare and distributional impacts on Vietnamese households. This dissertation examines the impact of trade liberalisation on growth, poverty and inequality for Vietnam. It develops a macro-micro analytical framework whereby a dynamic computable general equilibrium (CGE) model is linked to a representative household model in order to capture these effects. The findings indicate that trade liberalisation will cause a significant increase in economic growth. The smallest gains occur under Vietnams unilateral trade liberalisation against ASEAN while the largest gains take place when Vietnam extends its liberalisation with the rest of the world. There will be a shift away from primary sectors towards industry-based sectors such as low-tech, intermediate manufacturing and durables. There is also substantial up-skilling of unskilled labour. Combined with the large real returns to capital goods, this will result in significant increases in both capital investments as well as in the accumulation of human capital. In addition, economic growth will induce a fall in poverty rates in Vietnam. Nonetheless, there will also be large increases in the inequality of income, especially in the rural sector. Hence, although growth has lifted a large proportion of households out of poverty, the distributional impacts have been detrimental to the most vulnerable households.
| Identifer | oai:union.ndltd.org:ADTP/236192 |
| Date | January 2008 |
| Creators | Wong, Melissa Oi Ming, Economics, Australian School of Business, UNSW |
| Publisher | Publisher:University of New South Wales. Economics |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | http://unsworks.unsw.edu.au/copyright, http://unsworks.unsw.edu.au/copyright |
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