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

Marijke Kuiper and Frank van Tongeren

No 331250, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

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.

Keywords: International Relations/Trade; Community/Rural/Urban Development (search for similar items in EconPapers)
Pages: 27
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331250

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