Annual Bank Conference on Development
Economics, Tokyo, May 29-30, 2006
POVERTY REDUCTION IN VIET NAM:
DISHARMONIES BEHIND THE
IMPRESSIVE ACHIEVEMENTS
by
Le Thuc Duc, Nguyen Thang and Vu Hoang Dat,
Viet Nam Academy of Social Sciences, Ha Noi
The Contents
1.
2.
3.
4.
5.
6.
Economic growth and poverty reduction
Inequality at glance
An identification of the poor
A regional consideration
Rural versus urban inequality
An econometric analysis of ethnic gap:
why it may increase?
7. Conclusions
Economic growth in Viet Nam 1993-2003
Annual growth rate of GDP per capita
per cent
8
6.3
6
5.6
4.3
4.7
1998-01
1998-03
4
2
0
1993-97
2002-03
Population density on expenditures
poverty line
percent
10
8
6
4
2
thousand VND
0
0
1000
2000
Y1993
3000
Y1998
Y2002
4000
Y2004
5000
Poverty rates through surveys: 1993 - 2004
60
58.1
37.4
40
28.9
19.5
20
18.5
9.5
6.9
0
1993
1998
Poverty rate
2002
Poverty gap
4.7
2004
Inequality in GINI coefficient
1993
1998
2002
2004
0.34
0.35
0.37
0.37
Urban
0.35
0.34
0.35
0.33
Rural
0.28
0.27
0.28
0.29
Vietnam
Determinants of provinces poverty
Population
distribution on expenditures
rate
1
poverty line
0.8
0.6
0.4
0.2
Thousand VND
0
0
1000
2000
S1993
S1998
3000
S2002
4000
S2004
5000
An identification of the poor
yi  X    i
'
i
Household head
Coefficient
Being ethnic minority
0.6682
***
Live in rural areas
0.5400
***
Household head age
-0.0220
*
Household head age
squared
0.0002
*
Who are the poor? (continue)
Regions of residence (Red River Delta as base)
North East
0.0724
North West
0.1319
North Central Coast
0.3344
***
South Central Coast
-0.1918
*
Central Highlands
-0.0621
South East
-0.7659
***
Mekong Delta
-0.4617
***
Who are the poor? (continue)
Household size
Number of children < 15 y
-0.0129
0.2923
***
Children ages 15 to 18
-0.0370
Remittance in 2004
-0.0001
***
Adverse weather in 2004
0.0946
*
Rice income/expenditure
0.3239
***
Who are the poor? (continue)
Education of household head
Primary Education
-0.2536
***
Lower Secondary
-0.2687
***
Upper Secondary
Higher education/
Vocational training
0.0817
-1.0141
***
Who are the poor? (continue)
Education of household head spouse
Primary Education
-0.2347
***
Lower Secondary
-0.0791
Upper Secondary
-0.3321
*
Higher education/
Vocational training
-1.1317
***
Regional differences
per cent
100
80
60
40
20
0
1993
1998
NW
NE
CHL
NCC
2002
RRD
SCC
2004
MD
SE
Urban/Rural inequality
Per cent
80
60
40
20
0
1993
1998
Urban
2002
Rural
2004
Ethnic gap in poverty rates
per cent
100
80
60
40
20
0
1993
1998
Kinh & Chinese
2002
Other ethnics
2004
Population density on expenditure: Ethnic
minority vs. majority
Percent
7
Poverty line
6
5
4
3
2
1
VND thousand
0
0
2000
4000
6000
Kinh & Chinese
8000
Other ethnics
10000
12000
Why ethnic gap may increase?
yi  X    i
'
i
•The left hand side is the 2004’s per capita expenditures
•Among the right hand side variables: “ethnicity” dummy,
the “ethnicity” times “road to commune centre”, “ethnicity”
times to other levels of education
•Those serve to measure the difference in the returns on
their education and in the effect of roads between the ethnic
minority and majority groups
Why ethnic gap may increase: results
Primary Education
274.75
**
Lower Secondary
697.74
Upper Secondary
992.63
***
***
Vocational training
Higher education
1132.23
2661.99
***
***
Why ethnic gap may increase: results
Primary Education * Ethnicity
191.81
Lower Secondary * Ethnicity
-460.06
**
Upper Secondary * Ethnicity
-1485.88
***
Why ethnic gap may increase? (continue)
Rice income/total expenditure
-871.21
***
Hit by weather in 2004
-167.19
**
Roads to commune centre
201.68
*
Additional return on roads to ethnic minority
Road to commune centre*
Ethnicity
-539.12
**
Concluding remarks
Even though the overall of poverty reduction in
Viet Nam over 1993-2004 is really impressive,
we see some cause for concern
 Urban/rural gap in poverty has been clear. That
gap can be decomposed into the difference in
factors (such as education, roads, clinics, and
market) and the difference in the marginal
effects of the factors. The former is found
significant, but the latter is weak and mixed

Concluding remarks (continue)



The ethnic gap consists of the difference in factors
(education, roads,...), and the difference in marginal
effects of the factors. Both are significant: the returns on
education and the marginal benefit of roads all for the
ethnic minorities are lower than that to Kinh&Chinese.
The differences in poverty between regions are mainly
due to the differences in ratios of urban and population
of ethnic groups. Other factors include condition for
migration and therefore the remittances.
It is essential to safeguard inclusiveness of development.
That requires a mobilization of development fund for the
remote isolated localities and an efficient use of the
development resources.
THANK YOU