How Does Vietnam's Accession to the World Trade Organization Change the Spatial Incidence of Poverty?

Trade policies can promote aggregate
efficiency, but the ensuing structural adjustments generally
create both winners and losers. From an incomes perspective,
trade liberalization can raise gross domestic product per
capita, but rates of emergence from poverty depend on
individual household characteristics of economic
participation and asset holding. To fully realize the growth
potential of trade, while limiting the risk of rising
inequality, policies need to better account for
microeconomic heterogeneity. One approach to this is
geographic targeting that shifts resources to poor areas.
This study combines an integrated microsimulation-computable
general equilibrium model with small area estimation to
evaluate the spatial incidence of Vietnam's accession
to the World Trade Organization. Provincial-level poverty
reduction after full liberalization was heterogeneous,
ranging from 2.2 percent to 14.3 percent. Full
liberalization will benefit the poor on a national basis,
but the northwestern area of Vietnam is likely to lag
behind. Furthermore, poverty can be shown to increase under
comparable scenarios.