ABSTRACT
Developing economies share several common characteristics in terms of the level of economic development, magnitude of unemployment, the severity of poverty, and the degree of openness to the rest of the world. The well-documented gains of ‘openness to trade’ have motivated many developing countries to undertake economic reforms and to liberalise their trade with the rest of the world. Vietnam initiated its reform process with the adoption of an innovation programme called ‘Doi Moi’ in 1986, and has since liberalised its trade and obtained membership with the WTO. A number of studies have shown the beneficial effect of trade in terms of the acceleration of economic growth and reduction in poverty (World Bank, 2005, 2006). The major limitations of the studies examining the effects of trade on growth and poverty in Vietnam have been that they appear to provide partial evidence. This study has examined the effects of trade liberalisation on poverty in Vietnam, using all the four channels suggested by Winters (2002) and Winters et al . (2004). It has also explained some of the issues relevant to the debate on the relationship between trade liberalisation and poverty. The research questions centre on two general issues. First, the study has sought to answer the question of whether trade liberalisation impacts welfare and poverty in Vietnam. Second, based on the analysis of the relationship between trade and poverty, it has evaluated the effects of trade liberalisation on poverty in terms of the perceptions of farm households who are most poor and most vulnerable to trade liberalisation policies.
