1. 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

2. The Contents 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?
Conclusions

3. Economic growth in Viet Nam 1993-2003

4. Population density on expenditures

5. Poverty rates through surveys: 1993 - 2004

6. Inequality in GINI coefficient
1993
1998
2002
2004
Vietnam
0.34
0.35
0.37
Urban
0.33
Rural
0.28
0.27
0.29

7. Determinants of provinces poverty rate
Population distribution on expenditures

8. An identification of the poor
Household head
Coefficient
Being ethnic minority
0.6682
***
Live in rural areas
0.5400
Household head age *
Household head age squared
0.0002

9. 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 *
Central Highlands
South East
Mekong Delta

10. Who are the poor? (continue)
Household size
Number of children < 15 y
0.2923
***
Children ages 15 to 18
Remittance in 2004
Adverse weather in 2004
0.0946 *
Rice income/expenditure
0.3239

11. Who are the poor? (continue)
Education of household head
Primary Education
***
Lower Secondary
Upper Secondary
0.0817
Higher education/ Vocational training

12. Who are the poor? (continue)
Education of household head spouse
Primary Education
***
Lower Secondary
Upper Secondary *
Higher education/ Vocational training

13. Regional differences

14. Urban/Rural inequality

15. Ethnic gap in poverty rates

16. Population density on expenditure: Ethnic minority vs. majority

17. Why ethnic gap may increase?
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

18. Why ethnic gap may increase: results
Primary Education
274.75 **
Lower Secondary
697.74
***
Upper Secondary
992.63
Vocational training
Higher education

19. Why ethnic gap may increase: results
Primary Education * Ethnicity
191.81
Lower Secondary * Ethnicity **
Upper Secondary * Ethnicity
***

20. Why ethnic gap may increase? (continue)
Rice income/total expenditure
***
Hit by weather in 2004 **
Roads to commune centre
201.68 *
Additional return on roads to ethnic minority
Road to commune centre* Ethnicity

21. Concluding remarks
Even though the overall of poverty reduction in Viet Nam over 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

22. 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.

23. THANK YOU