Impacts of globlisation and trade liberalisation on small households in Vietnam livestock sector

Vietnam has negotiated a series of bilateral and multilateral trade agreements and has made significant steps in integrating into the world economy. This integration is likely to have both positive and negative effects on different stakeholders in the economy. This study assesses the impacts of trade liberalisation on Vietnam's small livestock households on welfare, production and consumption behaviours, using a multi country general equilibrium model (GTAP) at the macro level, linked with four, regionally representative household models at the micro level. A GTAP utility SplitCom is used to separate live pig and live poultry out of the general livestock group prior to running several trade liberalisation scenarios. The household model is linked to the trade model through changes in the prices of inputs and outputs arising from different trade scenarios. Inside the household model, a recursive household model is used, with a two-stage LES-AIDS model on the consumption side and Cobb-Douglas functions on the production side. The results of the simulations shows that Vietnam’s small households in the livestock sector would benefit from almost all trade liberalisation scenarios considered here. The largest benefit is generated by full liberalisation: by comparison there is almost no gain from bilateral trade liberalisation with the USA. The voluntary trade liberalisation of Vietnam in a unilateral liberalisation would generate some benefit for the country at the national level without the need for negotiating with others, and also increase the welfare of the households. The changes in simulated prices lead to changes in the household’s welfare as a result of changes in behaviour, including consumption, production (and hence profit), and also in the time allocation decision of the household.