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Global market shocks and poverty in Vietnam: the case of rice
Author(s) -
Coxhead Ian,
Linh Vu Hoang,
Tam Le Dong
Publication year - 2012
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2012.00604.x
Subject(s) - ceteris paribus , economics , shock (circulatory) , welfare , consumption (sociology) , general equilibrium theory , poverty , food prices , computable general equilibrium , price shock , production (economics) , partial equilibrium , food security , macroeconomics , monetary economics , agriculture , microeconomics , economic growth , market economy , medicine , social science , ecology , sociology , biology
World food prices have experienced dramatic increases in recent years. These “shocks” affect food importers and exporters alike. Vietnam is a major exporter of rice, and rice is also a key item in domestic production, employment, and consumption. Accordingly, rice price shocks from the world market have general equilibrium impacts and as such, their implications for household welfare are not known ex ante . In this article, we present a framework for understanding the direct and indirect welfare effects of a global market shock of this kind. We quantify transmission of the shock from global indicator prices to domestic markets. Then we use an applied general equilibrium model to simulate the economic effects of the price changes. A recursive mapping to a nationally representative household living standards survey permits us to identify in detail the ceteris paribus effects of the shock on household incomes and welfare. In this analysis, interregional and intersectoral labor market adjustments emerge as key channels transmitting the effects of global price shocks across sectors and among households.