Regions and Countries

	Table of Contents
p. 3 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Viet Nam : I. Country Performance Assessment

---

B. Poverty Assessment

12. With an average per capita income of about $350, a significant proportion of Viet Nam’s population continues to live in relatively impoverished conditions. Poverty in Viet Nam is mainly a consequence of overall low levels of income due to stunted economic growth in the past decades. While inequality has been growing in relative terms, income distribution is still rather egalitarian, so the scope for redistribution without growth is limited. In addition, poverty is largely a rural phenomenon, with 45 percent of the rural population living below the poverty line, and is particularly concentrated in three areas: the Northern Uplands, Central Highlands, and North Central Coast. Poverty rates in these three regions are on average 50 percent higher than the national average. The poor are typically farmers with low levels of educational attainment, particularly ethnic minorities living in the upland areas. The links between poverty and environmental degradation are strong, since the poor (and those who just emerged from poverty) are often vulnerable to climatic events (floods, typhoons) whose consequences are exacerbated by degradation of the upper watersheds and coastal areas.

13. Recent data show that the incidence of poverty has declined significantly over the last five years: from 58 percent in 1992/93 to 37 percent in 1997/98. This drop has been accompanied by improvement in other social indicators, including primary enrolment ratios, access to safe drinking water, and reduction in child malnutrition. The main factor underlying Viet Nam’s success in poverty reduction is the strong growth performance during this period, underpinned by economic reforms, significant inflows of FDI, and continuation of redistributive policies. In particular, liberalization of agricultural input and output markets has led to higher productivity and incomes in rural areas, where the bulk of population and of the poor are concentrated. Targeted poverty reduction has been pursued through a Government Hunger Eradication and Poverty Reduction (HEPR) program, aimed at the poorest 1,715 communes. The significant recent reduction in poverty has been accompanied by some increase in inequality, due mainly to widening rural-urban gaps. The gains in poverty reduction remain fragile, since many individuals who were positioned just below the total poverty line in 1993 are now clustered just above it. Adverse individual or collective circumstances (such as the November 1999 floods) can rapidly reverse such gains. Future progress in poverty reduction will depend on continued growth accompanied by distribution of benefits, and on reducing vulnerability to external shocks.

Back A. Economic Performance Assessment	Next C. Assessment of Socio-Environmental Performance