1. Linking Economic Growth and Poverty Reduction --Large-Scale Infrastructure in the Context of Vietnam’s CPRGS-- GRIPS Development Forum December 2, 2003

2. Pro-Poor Growth: Three Channels (1) Direct channel : Impacting the poor directly. (← basic, rural infrastructure) (2) Market channel: Growth helps the poor via economic linkages (or “trickle down” ). (3) Policy channel : Supplementing the market channel and guiding the development process toward greater equality. (← large-scale infrastructure ） … “Pro-poor Infrastructure”?

3. Analytical Framework: Linkage Effects First-round Impacts 1.Investment-inducement effect 2.Regional economy activation effect 3.Social dimension 4.Effective demand effect Second-round Impacts (broader and more general) 1.Fiscal revenue and multiplier effect

4. Economic Dimension Market creation/ expansion ・ Increased incentives to entry ・ Opening up new economic opportunities ・ Improved productivity of existing economic activities Procurement ・ Materials ・ Labor demand Improved social indicators Improved infrastructure services ・ Availability ・ Cost reduction ・ Time saving ・ Reliability Social Dimension Improved access to basic social/public services with availability of transport & power supply Effective demand of infrastructure construction (& operations) New investment ・ FDI ・ Local investment Regional economy activation ・ Rural ・ Urban …via: agriculture, off-farm business, tourism, services, manufacturing etc. Fiscal channel: Increased revenues for: ・ Pro-poor programs ・ Infrastructure ・ Recurrent costs etc. Sustainability Foreign residents/ travelers’ demand Private channel (Trickle down) ・ Investment ・ Consumption Employme nt creation Growth Linkages among Large-Scale Infrastructure, Growth, and Poverty Reduction: Hypothetical Illustration Poverty Reduction (1 st Round Impacts) Poverty Reduction (Broader Impacts) Infrastructure Development Higher Income

5. Toward Sustainable Infrastructure Development (1)Measures to ensure appropriate resource allocation (e.g., selection and allocation procedures, recurrent financing). (2)Measures to make inputs into infrastructure effective (e.g., mobilization of diverse resources, enabling environment & sector policies, the network effect, project mgt., O&M). (3)Measures to mitigate possible negative impacts (e.g., environmental and social impacts).

6. Shared Development Vision Strategies and Policies for Promoting Growth and Poverty Reduction Measures/ Objectives Large-scale Infrastructure Complementary measures （ examples) Rural roads Human capital Targeted interven- tions Policy & Institutio ns Growth Creation XXX Growth Diffusion XXXX Direct Poverty Reduction XXXX