Impact of accession to WTO on Agricultural Sector in Vietnam

Abstract

After much deliberation, Vietnam officially became a member of World Trade Organisation (WTO) in 2006. There is substantial empirical evidence on how accession to WTO can lead to economic development, improvement in trade balances, improvement in poverty levels and the closing of income and wages, and in doing so, reduce inequalities. Given the fact that most of the Vietnamese population lives in rural area (precisely, 78%) and approx. 11 million people are directly or indirectly involved in the agriculture sector. Given that the Vietnamese economy is heavily reliant on the agriculture sector, it is not surprising that the sector contributes significantly to Gross Domestic Product (approx. 21%). However, to the best of the author’s knowledge, the literature is largely silent on the impact of accession on agricultural sector. Taking a cue from this missing link in the literature, the primary objective of this paper is to assess the impact of accession to WTO on the agriculture sector. The data is collected from the World Development Indicators (WDI). As the accession to WTO took place in 2006, the paper uses a dummy variable to differentiate pre and post accession. Precisely, the dummy takes the value of “1” from 2006 onwards and “0” before 2006. The data spans from 1997 to 2019. The choice of data is dictated by its availability. The findings from the paper show a positive and significant effect of accession to WTO on the agriculture sector. This is not surprising as accession to WTO can help the agriculture sector gain access to more international markets through adoption of liberalization policies. Key findings are discussed, and the implications are provided in the concluding section of the paper.