Storm in a rice bowl: Rice reform and poverty in Vietnam in the 1990s

This paper analyses the poverty impact of Vietnam’s reforms, especially with reference to the rice economy, during the 1990s. It reviews trade and institutional reforms that directly impinged on the rice sector, and the trends in rice production, consumption and prices throughout the 1990s. We then analyse the impact of rice production on poverty dynamics by estimating a multinomial logit model based on a panel of 4,302 households. Our results show that the increased rice production as a result of various reforms contributed to poverty reduction. We also explore whether households that are disproportionately heavy consumers of rice suffered from the price increase. We examine whether allowing the poverty line to reflect household-specific consumption bundles would change the identification of poverty dynamics. We conclude that unless the large changes in relative prices are accompanied by massive differences in consumption baskets across households accounting for differences in consumption preferences would make little difference in assessing the poverty implications of reform.