EXPORT LIBERALIZATION AND HOUSEHOLD WELFARE - THE CASE OF RICE IN VIETNAM

Vietnam has rapidly become one of the three largest rice exporters in the world, in spite of a binding export quota. This article uses a mul timarket spatial-equilibrium model to examine the effect of further li beralization on regional rice prices. Household data are then used to calculate the welfare impact of these price changes on different house hold groups. The results suggest that although rice export liberalizat ion would raise food prices and exacerbate regional inequality, it wou ld also increase average real income and reduce (slightly) the inciden ce and severity of poverty. We explore several explanations of these a pparently paradoxical results.