With its increasing integration into the world economy, agricultural exports and
\nrural incomes in Vietnam have increased substantially in recent years. At the sub-national level, however, there are concerns that not all regions and categories of
\nagricultural producers have and will benefit from the ongoing liberalization of
\nagricultural markets.<\/p>\n
Vietnam’s elongated geography and lack of spatial market integration pose special
\nproblems in this regard. Accordingly, this study aims to answer three interrelated
\nquestions: (a) whether there is spatial integration between paddy markets in the
\nNorth and South of Vietnam; (b) whether there is spatial integration in paddy
\nmarkets within the North and within the South; and, (c) if within-region
\nintegration is stronger and faster than between-region integration.<\/p>\n
The empirical model we develop to answer these questions, uses estimates of
\ntransfer costs to generalize the well known model of spatial market integration
\ndue to Ravallion to allow for the possibility of threshold effects. A sequential
\ntesting strategy is developed which progressively tests for market segmentation,
\nthe number of thresholds, long-run market integration, common
\ndynamics\/informational efficiency, and (a strict version of) the ‘Law’ of One
\nPrice within an error-correction framework.<\/p>\n
When the unrestricted version of this model is estimated using monthly paddy prices
\nfor eight markets between 1993 and 2006, we find weak evidence of market
\nintegration between paddy markets in the North and South of Vietnam with an absence
\nof threshold effects. However, there is evidence of both threshold effects and stronger
\nforms of spatial market integration for paddy markets within the North and within the South, with at least 60% percent of price changes being transmitted between markets
\nwithin one month whenever price spreads exceeds their upper or lower thresholds. The
\nextent and speed of price transmission within regional paddy markets is generally
\nfaster in the South than the North of Vietnam. However, the instantaneous version of
\nthe ‘Law’ of One Price, which requires full price adjustment to occur within a month,
\nonly holds for a few regimes and market pairs.<\/p>\n
Three main policy implications flow from these results. First, since there is limited
\nevidence of integration between paddy markets in the North and South of Vietnam,
\nnational level policies cannot be relied upon to stabilize or support paddy prices.
\nSecond, since there is evidence of spatial market integration within the Red River and
\nMekong River deltas, paddy markets within these regions can be relied upon to
\ntransmit price signals between deficit and surplus areas relatively well. Third, since
\nthe speed and extent of price transmission is relatively rapid within the North and
\nwithin the South of Vietnam, the private sector trade can be relied upon to transfer
\nrice and paddy between markets in an efficient manner. Problems might, however,
\nemerge if large demand-supply imbalances were to emerge between the North and
\nSouth, as transfer costs would prevent private sector trade taking place. In these
\ncircumstances, the public sector might need to intervene, in a consistent and market
\nfriendly way, to ensure adequate food supplies in the short-term.<\/p>\n","protected":false},"featured_media":0,"template":"","cate_publications":[],"author_publications":[1550,1551,1578,1579],"topic_publications":[],"class_list":["post-8754","publications","type-publications","status-publish","hentry","author_publications-henrik-hansen","author_publications-le-dang-trung","author_publications-tran-ngo-minh-tam","author_publications-bob-baulch"],"acf":[],"_links":{"self":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/publications\/8754","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/publications"}],"about":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/types\/publications"}],"wp:attachment":[{"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/media?parent=8754"}],"wp:term":[{"taxonomy":"cate_publications","embeddable":true,"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/cate_publications?post=8754"},{"taxonomy":"author_publications","embeddable":true,"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/author_publications?post=8754"},{"taxonomy":"topic_publications","embeddable":true,"href":"https:\/\/depocen.org\/vi\/wp-json\/wp\/v2\/topic_publications?post=8754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}