Who Gained from Vietnam's Boom in the 1990s? An Analysis of Poverty and Inequality Trends

Abstract:     
Vietnam's gains in poverty reduction between 1992 and 1998 were striking, and the country's impressive growth has been fairly broad-based. Households that have benefited most are well-educated, urban, white-collar households, while agricultural workers, ethnic minorities, and those residing in poorer regions have progressed least.

Glewwe, Gragnolati, and Zaman assess the extent to which Vietnam's rapid economic growth in the 1990s was accompanied by reductions in poverty. They also investigate factors that contribute to certain households benefiting more than others. Using information from two household surveys, the Vietnam Living Standards Surveys (VNLSS) for 1992-93 and 1997-98, they show that Vietnam's gains in poverty reduction were striking during this period and that the country's impressive growth has been fairly broad-based.

After discussing descriptive statistics for both years, the authors examine factors contributing to poverty reduction using both simple decomposition analysis and a multinomial logit model. The results show that:

Returns to education increased significantly during this period, particularly for higher levels of education.

Location significantly affected a household's probability of escaping poverty during this period. Urban households enjoyed a greater reduction in poverty than did rural households, and households residing in the Red River Delta and the southeast were also better able to take advantage of new opportunities.

White-collar households benefited most, and agricultural laborers the least.

However, Vietnam cannot afford to be complacent, as nearly half its rural population lives below the poverty line, poverty rates among ethnic minorities remain very high, and natural calamities are a serious impediment to poverty reduction.

This paper - a product of Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to understand the dynamics of poverty.

Working Paper Series