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Growing Together or Growing Apart? A Village Level Study of the Impact of the Doha Round on Rural China

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  • Kuiper, Marijke
  • van Tongeren, Frank

Abstract

Most studies of the opening of the Chinese economy focus on the national level. The few existing more disaggregated analyses are limited to analyzing changes in agricultural production. In this paper we employ an innovative village equilibrium model which accounts for nonseparability of household production and consumption decisions. This allows us to analyze the impact of trade liberalization on household production, consumption and off-farm employment, the interactions among these three aspects of household decisions, as well as the interactions among households in a village economy. Analyzing the impact of trade liberalization we find changes in relative prices of inputs and outputs and outside village employment to have opposite impacts on household decisions. Price changes affect the labor intensity of rice production as households switch between intensive two-season and on-season rice in response to changes in their shadow wages. Outside village employment opportunities induce a less labor intensive rice cropping. The consequent drop in demand for traction services reduces cash income for those households that do not have access to migration and thus economic growth in coastal areas affects them indirectly through the village factor market. In terms of aggregate village agricultural supply response we find the impact of the increase in employment to dominate aggregate response. As a result the marketed surplus of case study village is found to be shifting from rice to livestock.

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  • Kuiper, Marijke & van Tongeren, Frank, 2004. "Growing Together or Growing Apart? A Village Level Study of the Impact of the Doha Round on Rural China," Conference papers 331250, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331250
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    1. Tan, Shuhao & Heerink, Nico & Kruseman, Gideon & Qu, Futian, 2008. "Do fragmented landholdings have higher production costs? Evidence from rice farmers in Northeastern Jiangxi province, P.R. China," China Economic Review, Elsevier, vol. 19(3), pages 347-358, September.
    2. Hertel, Thomas W. & Winters, L. Alan, 2005. "Poverty impacts of a WTO agreement : synthesis and overview," Policy Research Working Paper Series 3757, The World Bank.
    3. John Gilbert, 2008. "Agricultural Trade Reform and Poverty in the Asia-Pacific: A Survey and Some New Results," Working Papers 2008-01, Utah State University, Department of Economics, revised 19 Dec 2008.
    4. Thomas W. Hertel & L. Alan Winters, 2005. "Estimating the Poverty Impacts of a Prospective Doha Development Agenda," The World Economy, Wiley Blackwell, vol. 28(8), pages 1057-1071, August.
    5. Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
    6. Kwiecinski, Andrzej & van Tongeren, Frank W., 2007. "Quantitative Evaluation of Agricultural Policy Reforms in China: 1993-2005," 2007: China's Agricultural Trade: Issues and Prospects Symposium, July 2007, Beijing, China 55028, International Agricultural Trade Research Consortium.
    7. John Gilbert, 2008. "Agricultural trade reform and poverty in the Asia-Pacific region: a survey and some new results," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 15(1), pages 1-34, June.

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