Structural adjustment implications of trade liberalisation in Vietnam

• Institute of Policy and Strategy for Agricultural and Rural Development, Vietnam

Vietnam has achieved remarkable economic growth since it liberalised its markets, and further economic growth and opportunities are predicted both within and outside the agriculture sector. However, significant structural adjustment pressures are expected in the short to medium term. The effect of these pressures on rural household income will be regionally and commodity specific, with some households gaining from increased opportunities while others will be worse off. Understanding the nature and magnitude of the distributional impacts of trade liberalisation, the difference between short run and long run costs and opportunities associated with structural adjustment is essential for designing effective policy. This project will assess structural adjustment issues associated with trade liberalisation, using quantitative economic models. This will involve identification of vulnerable groups and industries and assessment of domestic policy options for facilitating structural adjustment. The economic cost associated with 'avoidance' policies will also be quantified. A set of existing/known/developed modelling tools will be used to focus on different scales of the problem, which will draw on existing trade models, but the main emphasis will be on developing capacity for analysing incomes and responses at the household level. The effectiveness of the economic models and subsequent domestic policy will also be assessed.