P overty rate (%. ) Northern Mountains. North & South Central Coast & South East. Central Highlands. Mekong Delt
Poverty Vietnam Development Report 2004 Consultative Group Meeting for Vietnam Hanoi, December 2-3, 2003
A joint report to the Consultative Group meeting With participation from: ADB, AusAID, DFID, GTZ, JICA, Save the Children UK, UNDP, and the World Bank
And Vietnamese researchers and policy makers from: GSO, MOLISA, MPI, NCSSH and RDSC (a local NGO)
Based on a Combination of Approaches • Analysis of data from the 2002 VHLSS
• Participatory poverty assessments in 12 provinces
• Impact evaluation of programs and projects
Covering Three Main Topics
•Who Are the Poor and Why Are They Poor?
• Current Public Policies and the Poor
•Towards a Stronger Poverty Focus in Public Policies
Poverty keeps declining in Vietnam
1993
1998
2002
Poverty rate
58.1
37.4
28.9
Urban
25.1
9.2
6.6
Rural
66.4
45.5
35.6
Kinh and Chinese
53.9
31.1
23.1
Ethnic minorities
86.4
75.2
69.3
But it remains high in rural areas and for ethnic minorities
The "story" behind poverty reduction in Vietnam Private sector development and job creation 30 % of those at work earn a wage in 2002 (only 19 % in 1998)
Agricultural diversification and integration with the market 70 % of agricultural output is commercialized in 2002 (only 48 % in 1993)
Growth remains strongly pro-poor in Vietnam Poverty and Economic Development across Countries National poverty rate (in percent of population)
80
60
Vietnam 1993
Vietnam 1998
40
Vietnam 2002
20
0 0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
GDP per capita (in PPP dollars)
Source:
Constructed based on the 1993 VLSS, 1998 VLSS, 2002 VHLSS and World Bank (2003a).
But there is a tension between incidence and density
Poverty is more shallow where most of the poor live
A broader trend towards increased inequality
Share of Expenditures by Population Quintile 1993
1998
2002
Poorest
8.4
8.2
7.8
Near poorest
12.3
11.9
11.2
Middle
16.0
15.5
14.6
Near richest
21.5
21.2
20.6
Richest
41.8
43.3
45.9
Total
100.0
100.0
100.0
Richest/Poorest
4.97
5.49
6.03
Source: GSO
Regional disparities are one of the main forces behind this trend
Ethnic minorities could be left behind Poverty Rates among Ethnic Minorities by Region Poverty rate (%)
100 90 80 70 60 50 1993
1998
2002
Northern Mountains North & South Central Coast & South East Central Highlands Mekong Delta
They will represent 37 % of the poor by 2010
Rural-urban migration could also lead to new faces of poverty The "premium" to migration is very high (85 %) Which will make it very difficult to stop the rural-urban migration wave
But not all will be better off Because of insufficient urban infrastructure and administrative exclusion
Growth will not be enough A Forecast of the Poverty Rate until 2010 poverty rate (%) 30
Grow th and Poverty Reduction
29 25
21.4 20 based on 1993-98 elasticity based on 1998-2002 elasticity
16.1
15
15.3
Forw ard looking approach
10 2002
2003
2004
2005
2006
2007
2008
2009
2010
Better public policies are needed to keep growth inclusive
Public could be better aligned to poverty reduction Public Spending in Health and Education sectors 12 10 8 6 4 2 0 1994
1995
1996
1997
Education
1998
1999
2000
2001
2002
Health
Initiatives like the Health Care Funds for the Poor go in the right direction
Out-of-pocket expenditures are an increasing burden on the poor Out-Of-Pocket Expenditures in Education in 2002 Primary education
Lower secondary education
VND (‘000) per year
In percent of household expenditure
VND (‘000) per year
In percent of household expenditure
Poorest
130.7
1.9
225.7
2.9
Near poorest
174.3
1.9
293.2
2.9
Middle
215.0
1.8
343.1
2.7
Near richest
290.8
1.8
457.5
2.7
Richest
756.7
2.4
1076.0
3.1
Vietnam
270.3
1.9
454.8
2.9
In health, they are leading to reduced use of professional care
Budget expenditures favor the poorest provinces Budget Transfers and Poverty across Provinces in 2002 Percapita transfer (000 VND) 1,500
0
-1,500
-3,000
-4,500 0.0
20.0
40.0
60.0
80.0
Poverty rate (%)
Indicates public spending minus collected revenue
But State investment goes to the richest provinces State Investment and Poverty Rates across Provinces Per capita investment (000 VND) 4,000
3,000
2,000
1,000
0 0.0
20.0
40.0
60.0
80.0
Poverty rate
Reinforcing the trend towards regional disparities Will this pattern be sustainable in the long run?
The quality of public spending can be improved
By integrating current and capital expenditures By developing Medium-Term Expenditure Frameworks By better screening the projects in the Public Investment Program
Policies need to be more systematically linked to outcomes Poverty rates and the VDGs are important benchmarks
But a system of indicators to monitor CPRGS is needed With responsibility assigned to specific agencies Including fewer key indicators at the province level
Targeted programs under HEPR could be more focused •Education fee exemptions reach the poor and increase enrollment
•Health care cards increase the use of professional care
•But they could be made more effective
•Other components of HEPR seem less successful
Consensus on poverty measuring and targeting is needed Combining the strengths of GSO and MOLISA •Income and/or expenditure data at aggregate levels •Poverty maps all the way down to districts and communes
Building on the knowledge of local officials •Education fee exemptions and health cards •Should be allocated at the village (thon) level
Success or failure will depend on the provinces Growth and Poverty Reduction across Provinces, 1993 to 2002 10.0 Lao cai
poverty rate change
0.0
Ninh thuan Tuyen quang
Vinh phuc
-10.0
-20.0 Dong nai -30.0 Da nang
Binh duong
-40.0 0.0
2.0
4.0
6.0 8.0 10.0 percapita income grow th
12.0
14.0
Due to decentralization, resources are increasingly local And decisions on their allocation too
16.0
CPRGS needs to be "rolled out" to the provinces
Not in the sense of writing a provincial CPRGS But rather completing the transition from a planning approach To a systematic use of statistical evidence and consultation
Donors have a key role to play in this process
Public Administration Reform gathers momentum
One-stop shop initiatives appreciated Province and district officials know about PAR But little impact to date in the eyes of the poor
Innovative monitoring mechanisms will be needed
Patchy progress in participation and grassroots democracy More knowledge at commune level of Decree 29/79 Views of progress diverge (official vs community) Corruption generates costs for the poor
Are incentives for village & commune officials right?
