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Impacts of Trade Liberalisation Commitments on the Vietnamese Economy: A CGE Approach
Author(s) -
Doanh Nguyen Khanh,
Heo Yoon
Publication year - 2009
Publication title -
world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/j.1467-9701.2009.01166.x
Subject(s) - computable general equilibrium , economics , vietnamese , international economics , accession , redistribution (election) , liberalization , welfare , tariff , income distribution , distribution (mathematics) , inequality , free trade , disadvantaged , international trade , macroeconomics , european union , economic growth , market economy , mathematical analysis , linguistics , philosophy , mathematics , politics , political science , law
This article quantifies the economic effects of tariff reduction following Vietnam's WTO accession. It differs from previous studies in several aspects. First, the model incorporates non‐standard features of the Vietnamese economy (e.g. changes in the domestic tax system). Second, the model divides Vietnamese households into 10 groups, allowing for the assessment of household welfare and income distribution. Third, the model has been run employing the most up‐to‐date database available. The major findings are summarised as follows. First, Vietnam as a whole would benefit from trade liberalisation. Second, the overall gain would be accompanied by a redistribution of income and a moderate increase in inequality between the rich and the poor. Third, concerning sectoral output, export‐oriented sectors, sectors with large shares of input in total imports, and those with increased domestic demands are likely to expand, whereas, in contrast, domestic‐oriented sectors are likely to contract. Measures to increase labour mobility, target disadvantaged groups and areas, and further liberalise service sectors are recommended as the recipe for effective utilisation of integration, as well as a more equitable pattern of growth.