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Agriculture and income distribution in rural Vietnam under economic reforms: A tale of two regions

We focus on the impact of two main policy changes: first, the increase in the rice export quota and the significant increase in the price of rice, especially in the south; second, liberalization of the fertilizer market and the sharp drop in the price of fertilizer. To this end, we document changes in the empirically observable “institutional environment,” exploring changes in rice and other crop prices as well as fertilizer prices. | Agriculture and Income Distribution in Rural Vietnam under Economic Reforms A Tale of Two Regions Dwayne Benjamin Loren Brandt Department of Economics University of Toronto 150 St. George Street Toronto Ontario M5S 3G7 CANADA March 2002 This paper is part of a World Bank project investigating the impact of economic reforms on households in Vietnam. The opinions expressed are solely those of the authors and do not represent the opinions of the World Bank or the Government of Vietnam. We thank Daniel Lee for exceptional research assistance the Social Sciences and Humanities Research Council of Canada and the World Bank for financial support. We are also grateful to Paul Glewwe for detailed suggestions and to comments from Chris Gibbs and participants at the World Bank conference in Hanoi May 2001. Agriculture and Income Distribution in Rural Vietnam under Economic Reforms A Tale of Two Regions Dwayne Benjamin Loren Brandt University of Toronto Abstract This paper exploits the panel dimension of the Vietnam Living Standards Survey VLSS in order to analyze the main changes occurring in agriculture in Vietnam over the period 19931998. This period was marked by a continuation of the reforms that began in 1988 with the implementation of Resolution 10 Vietnam s own version of the Chinese Household Responsibility System. We focus on the impact of two main policy changes first the increase in the rice export quota and the significant increase in the price of rice especially in the south second liberalization of the fertilizer market and the sharp drop in the price of fertilizer. To this end we document changes in the empirically observable institutional environment exploring changes in rice and other crop prices as well as fertilizer prices. With this as background we explore changes in rice production consumption and marketing and their links to changes in prices and incomes. We also estimate the degree to which these increases can be explained by increased use of inputs .