Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis
Abstract
:1. Introduction
2. Overview of Vietnamese Agriculture in the Process of Trade Liberalization
2.1. Current State of Vietnamese Agriculture
2.2. Roadmap of Agricultural Trade Liberalization in Vietnam
2.3. Domestic Support for Agriculture
3. Theoretical Framework and Research Methods
3.1. Determination of Effective Rate of Protection
3.1.1. Formulation of Effective Rate of Protection
3.1.2. Determination of in an Input–Output System
3.1.3. Determination of , and
3.1.4. Sign of ERP
- (i)
- The industry can be harmed by intervention or it would be better off under a free trade regime.
- (ii)
- The industry would be worse off under a free trade or it is highly supported by state intervention.
3.1.5. Level of Effective Protection
100 percent and above | = | extremely strongly protected |
50 percent to 99 percent | = | highly protected |
0 percent to 49 percent | = | protected |
≤0 percent | = | negative ERP |
3.2. Value-Added Multipliers
4. Results
5. Conclusions and Policy Recommendations
Author Contributions
Funding
Conflicts of Interest
References
- Anderson, James E. 1970. General Equilibrium and the Effective Rate of Protection. Journal of Political Economy 78: 717–24. [Google Scholar] [CrossRef]
- Anderson, Kym. 2003. Measuring Effects of Trade Policy Distortions: How Far Have We Come? The World Economy 26: 413–40. [Google Scholar] [CrossRef]
- Athukorala, Prema-chandra. 2006. Trade Policy Reforms and the Structure of Protection in Vietnam. The World Economy 29: 161–87. [Google Scholar] [CrossRef] [Green Version]
- Balassa, Bela. 1965. Tariff Protection in Industrial Countries: An Evaluation. Journal of Political Economy 73: 573–94. [Google Scholar] [CrossRef]
- Bui, Trinh. 2010. Measuring the Effective Rate of Protection in Vietnam’s Economy with Emphasis on the Manufacturing Industry: An Input-Output Approach (No. 12). Retrieved from Development and Policies Research Center (DEPOCEN), Vietnam. Available online: https://ideas.repec.org/p/dpc/wpaper/1210.html (accessed on 12 January 2020).
- Bureau, Jean-Christophe, Sebastien Jean, and Alan Matthews. 2005. The Consequences of Agricultural Trade Liberalisation for Developing Countries: Distinguishing between Genuine Benefits and False Hopes (SSRN Scholarly Paper No. ID 739751). Retrieved from Social Science Research Network Website. Available online: https://papers.ssrn.com/abstract=739751 (accessed on 15 January 2020).
- Chen, Bo, Hong Ma, and David S. Jacks. 2017. Revisiting the Effective Rate of Protection in the Late Stages of Chinese Industrialisation. The World Economy 40: 424–38. [Google Scholar] [CrossRef]
- Corden, Warner Max. 1966. The Structure of a Tariff System and the Effective Protective Rate. Journal of Political Economy 74: 221–37. [Google Scholar] [CrossRef]
- Corden, Warner Max. 1971. The Theory of Protection, 1st ed. Oxford: Oxford University Press. [Google Scholar]
- Diakantoni, Antonia, and Hubert Escaith. 2012. Reassessing Effective Protection Rates in a Trade in Tasks Perspective: Evolution of Trade Policy in “Factory Asia” [MPRA Paper]. Available online: https://mpra.ub.uni-muenchen.de/41723/ (accessed on 7 July 2019).
- Diakantoni, Antonia, and Hubert Escaith. 2014. Trade in Tasks, Tariff Policy and Effective Protection Rates. Available online: https://ssrn.com/abstract=2541676 (accessed on 14 January 2020).
- Feenstra, Robert C. 1992. How Costly is Protectionism? The Journal of Economic Perspectives 6: 159–78. [Google Scholar] [CrossRef] [Green Version]
- Greenaway, David, and Chris Milner. 2003. Effective Protection, Policy Appraisal and Trade Policy Reform. The World Economy 26: 441–56. [Google Scholar] [CrossRef]
- Johnson, Harry G. 1969. The Theory of Effective Protection and Preferences. Economica 36: 119–38. [Google Scholar] [CrossRef]
- Lam, Nguyen Bich, Bui Trinh, and Nguyen Viet Phong. 2013. Measuring the Effective Rate of Protection in Vietnam’s Economy after Five Years Joining WTO (An Input-Output Analysis Approach). Global Journal of Human-Social Science Research 13: 12–20. [Google Scholar]
- McCaig, Brian, and Nina Pavcnik. 2013. Moving out of Agriculture: Structural Change in Vietnam (No. w19616). Cambridge: National Bureau of Economic Research. [Google Scholar]
- Miller, Ronald E. 2009. Input-Output Analysis: Foundations and Extensions, 2nd ed. Cambridge and New York: Cambridge University Press. [Google Scholar]
- OECD. 2019. “Viet Nam”, in Agricultural Policy Monitoring and Evaluation 2019. Paris: OECD Publishing. [Google Scholar] [CrossRef]
- Orden, David, Fuzhi Cheng, Hoa Nguyen, Ulrike Grote, Marcelle Thomas, Kathleen Mullen, and Dongsheng Sun. 2007. Agricultural Producer Support Estimates for Developing Countries: Measurement Issues and Evidence from India, Indonesia, China, and Vietnam. Research Report No. 152. Washington, DC: International Food Policy Research Institute. [Google Scholar]
- Pham, Van Ha. 2007. An Assessment of Effective Rate of Protection in Vietnam in the Process of Economic Integration and Policy Implications. Journal of Finance 10: 49–52. (In Vietnamese). [Google Scholar]
- Rodriguez, Francisco, and Dani Rodrik. 1999. Trade Policy and Economic Growth: A Skeptic’s Guide to Cross-National Evidence. (Working Paper No. 7081). Cambridge: National Bureau of Economic Research. [Google Scholar] [CrossRef]
- Santos-Paulino, Amelia U. 2005. Trade Liberalisation and Economic Performance: Theory and Evidence for Developing Countries. The World Economy 28: 783–821. [Google Scholar] [CrossRef]
No | ISIC Code | Industry | 2012 | 2016 | ||
---|---|---|---|---|---|---|
Value-Added Multiplier | Effective Rate of Protection (%) | Value-Added Multiplier | Effective Rate of Protection (%) | |||
1 | 011 | Growing of non-perennial crops | 1.11 | 0.19 | 1.10 | 0.17 |
2 | 012 | Growing of perennial crops | 1.11 | 0.27 | 1.10 | −0.06 |
3 | 014 | Animal production | 0.91 | −0.10 | 0.92 | −0.04 |
4 | 016 | Support activities to agriculture and post-harvest crop activities | 1.11 | 0.05 | 1.09 | −0.13 |
5 | 021 | Silviculture and other forestry activities | 1.16 | 0.07 | 1.34 | −0.02 |
6 | 022 | Logging | 0.61 | 0.03 | 0.73 | 0.03 |
7 | 023 | Gathering of non-wood forest products | 1.25 | 0.15 | 1.30 | 0.05 |
8 | 024 | Support services to forestry | 1.16 | 0.12 | 1.21 | 0.06 |
9 | 031 | Fishing | 0.72 | 0.19 | 0.73 | 0.17 |
10 | 032 | Aquaculture | 0.99 | 0.35 | 1.01 | 0.41 |
No | ISIC Code | Industry | 2012 | 2016 | ||
---|---|---|---|---|---|---|
Value-Added Multiplier | Effective Rate of Protection (%) | Value-Added Multiplier | Effective Rate of Protection (%) | |||
1 | 101 | Processing and preserving of meat | 0.98 | 1.42 | 0.98 | 1.77 |
2 | 102 | Processing and preserving of fish, crustaceans and mollusks | 0.98 | 0.84 | 0.98 | 1.94 |
3 | 103 | Processing and preserving of fruit and vegetables | 0.93 | 0.63 | 0.95 | 1.72 |
4 | 105 | Manufacture of dairy products | 0.73 | 0.46 | 0.73 | 0.47 |
5 | 106 | Manufacture of grain mill products, starches and starch products | 1.00 | 1.23 | 1.00 | 1.36 |
6 | 108 | Manufacture of prepared animal feeds | 0.96 | 0.01 | 0.96 | −0.58 |
7 | 16 | Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials | 0.58 | 0.42 | 0.73 | 0.62 |
8 | 201 | Manufacture of basic chemicals, fertilizers and nitrogen compounds, plastics and synthetic rubber in primary forms | 0.90 | 0.04 | 0.88 | −0.02 |
9 | 2021 | Manufacture of pesticides and other agrochemical products | 0.61 | 0.13 | 0.66 | 0.20 |
No | ISIC Code | Industry | ERP (%) |
---|---|---|---|
Primary agriculture, forestry, and fishery industries | |||
1 | 011 | Growing of non-perennial crops | −1.48 |
2 | 012 | Growing of perennial crops | −1.68 |
3 | 014 | Animal production | −0.45 |
4 | 016 | Support activities to agriculture and post-harvest crop activities | −1.24 |
5 | 021 | Silviculture and other forestry activities | −0.55 |
6 | 022 | Logging | −0.07 |
7 | 023 | Gathering of non-wood forest products | −0.67 |
8 | 024 | Support services to forestry | −0.49 |
9 | 031 | Fishing | −3.89 |
10 | 032 | Aquaculture | −0.15 |
Agriculture, forestry, and fishery related industries | |||
11 | 101 | Processing and preserving of meat | 25.03 |
12 | 102 | Processing and preserving of fish, crustaceans and mollusks | −0.74 |
13 | 103 | Processing and preserving of fruit and vegetables | −0.78 |
14 | 105 | Manufacture of dairy products | −1.65 |
15 | 106 | Manufacture of grain mill products, starches and starch products | −0.08 |
16 | 108 | Manufacture of prepared animal feeds | −1.47 |
17 | 16 | Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials | −0.71 |
18 | 201 | Manufacture of basic chemicals, fertilizers and nitrogen compounds, plastics and synthetic rubber in primary forms | 6.55 |
19 | 2021 | Manufacture of pesticides and other agrochemical products | −2.44 |
© 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Share and Cite
Ho Dinh, B.; Nguyen Phuc, H.; Bui, T.; Nguyen, H. Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis. Economies 2020, 8, 43. https://doi.org/10.3390/economies8020043
Ho Dinh B, Nguyen Phuc H, Bui T, Nguyen H. Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis. Economies. 2020; 8(2):43. https://doi.org/10.3390/economies8020043
Chicago/Turabian StyleHo Dinh, Bao, Hai Nguyen Phuc, Trinh Bui, and Hau Nguyen. 2020. "Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis" Economies 8, no. 2: 43. https://doi.org/10.3390/economies8020043
APA StyleHo Dinh, B., Nguyen Phuc, H., Bui, T., & Nguyen, H. (2020). Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis. Economies, 8(2), 43. https://doi.org/10.3390/economies8020043