Market Access and Specialization in Cash Crops: Vietnam’s Expected Gains from WTO Accession

This paper discusses the link between trade liberalization and farmers’ decisions to specialize in cash crops. Farmers are differentiated between subsistence-oriented farmers and export-oriented cash crop producers. Amongst the latter, using a panel survey from 2002 to 2004, we can identify export-oriented farmers, farmers exiting the export market and those entering the market. An agricultural trade index is computed that captures access to the export market according to each province’s specialization in cash crops. The decision to enter, exit or remain in the export market is then related to the trade index while controlling for household and farm characteristics. The gain in agricultural income due to changes in foreign market access is estimated. Finally, the impact of an improvement of market access abroad is then simulated.