 |
ASEAN members has achieved economic development through trade liberalization. One of the remaining challenges is the still high level of domestic income inequality. One of the factors to this domestic economic disparity is the gap between urban and rural areas. This paper provides an empirical analysis of how rural economic welfare is affected by trade liberalization, using Cambodia as a case study. Using household surveys and satellite imagery, the following two research questions are addressed. The first is; how does trade liberalization affect rural economic welfare in developing countries? Second; does its impact affect disparities in rural economic welfare? Estimation result shows that increased agricultural exports raise rural economic welfare, but that higher international prices for agricultural products do not have a significant impact. On the other hand, the increase in exports raises the level of economic welfare only for the highest welfare groups, with no effect on the poorest household groups. In other words, the results suggest that trade liberalization may increase intra-rural inequality.
