Poverty in Vietnam: the effects of shocks and sectoral growth patterns

Dang, Thi Thu Hoai (2011) Poverty in Vietnam: the effects of shocks and sectoral growth patterns. PhD thesis, University of Glasgow.

Abstract

The thesis aims to examine the effects of adverse shocks and sectoral growth patterns on poverty. The issue of adverse shocks has recently drawn the attention of academics and policymakers alike, but evidence of the persistent impacts of different types of shocks on poverty is limited due to a lack of data; the significance of the impacts compared to other factors has also not been well studied. With the advantage of the unique data set for Vietnam, this thesis deals with the above issues and provides the most comprehensive study of the effects of shocks on poverty. Secondly, it is argued in the current literature that sectoral growth pattern matters for pro-poor growth. Current findings in the literature reveal a mixed picture regarding which industries contribute most to poverty reduction. It is stressed that a labour-intensive feature tends to make an industry more pro-poor. This study provides a wider and more consistent approach to explaining the mixed results in the literature, and compares different growth patterns in terms of poverty reduction. The issues have been examined in the context of Vietnam, a country successful in fighting poverty over the last decades.

The two issues are investigated in three core chapters, in addition to the introduction and conclusion chapters. The first core chapter deals with the issue of adverse shocks by applying an econometric method. It confirms that four types of shocks, namely natural disaster, illness of a household member, crop failure and disease of livestock, generate a negative impact on poverty. The effect of natural disasters and health shocks can be persistent, lasting for more than three years and keeping people in persistent deprivation. The negative effect of shocks on poverty is significant enough to nullify the poverty-reduction achievements of other policies, such as the education policy. Government intervention in relieving the negative impact of shocks is necessary, and has helped Vietnam reduce its poverty headcount rate by up to 10%.

The second and third core chapters study the effects of sectoral growth pattern on poverty and inequality by combining a Social Accounting Matrix multiplier decomposition technique and a Computable General Equilibrium micro-simulation modelling. The first approach is used in the second chapter, where it allows examination of the issue in the short term and identifies the factors that can affect the pro-poorness of the sectoral growth. The results show that some agricultural sectors, food processing and some non-financial services sectors contribute most to poverty reduction in Vietnam. The magnitude of the poverty reduction from sectoral growth depends on four features of the industry, namely labour-intensiveness, production linkage with the labour-intensive sector, the degree of sector interdependency, and the poverty sensitivity to income of the people who benefit from the growth of the sector. The growth rate of the sector itself also determines its contribution to poverty reduction. Sub-sectors of either agriculture, industry or service sectors can have these features; this explains the mixed findings in the literature. The second approach is applied in the third core chapter, which examines the issue in the medium and long term. The issues of inequality and spatial and ethnic poverty are also discussed in this chapter. The result confirms that more rapid growth of the sectors identified as the most pro-poor in the previous chapter is the most pro-poor long term sectoral growth pattern. Even the most pro-poor growth pattern generates a difference in spatial and ethnic poverty, and increases inequality.

The thesis contributes to the improvement of the research methodology and a better understanding of the relationship between shocks, sectoral growth and poverty. The findings of the thesis provide policy implications for poverty reduction. There is an urgent need to improve the safety net system that helps people cope with adverse shocks. Promoting labour-intensive industry is not the only way to promote pro-poor growth. Industries that have a close production linkage with labour intensive industry have a strong interdependency with the rest of the economy, and the high poverty sensitivity of the people who benefit from the industry growth can also contribute largely to poverty reduction. As a result, the most pro-poor sector can be a sub-sector in the agriculture, industry or service sectors. This introduces more diversified and broader insights into the pro-poor sectoral growth pattern, which can widen policy choices for countries and be tailored to the country’s condition rather than narrowly advocating the development of the agricultural sectors.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Keywords: Poverty, Vietnam, Sectoral Gro­­­­­­­­­­­­­wth, Shock, Computable General Equilibrium model, Micro-simulation model
• Subjects: H Social Sciences > HN Social history and conditions. Social problems. Social reform; H Social Sciences > HC Economic History and Conditions
• Colleges/Schools: College of Social Sciences > Adam Smith Business School > Economics
• Supervisor's Name: Angeles, Dr. Luis
• Date of Award: 2011
• Depositing User: Mrs Thi Thu Hoai Dang
• Unique ID: glathesis:2011-2659
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 03 Jun 2011
• Last Modified: 10 Dec 2012 13:58
• URI: https://theses.gla.ac.uk/id/eprint/2659