Catalog

Viet Nam’s achievements in reducing poverty during the past decade have been stunning.

The poverty rate has dropped almost 40% since 1990 to only 37% in 1998, and consumption has surged among the poor and nonpoor. Higher health and education levels have resulted in decreased infant mortality rates and higher enrollment rates in schools. One of only a handful of countries that have reduced poverty by so much in such a short time, Viet Nam has a lot to be proud of.

Doi moi — a set of policy reforms that ushered in a market-based economy — is often credited with the dramatic growth the country has experienced since 1990.

But there is another side to the story.

Although the poor have reaped substantial gains in the last decade, the nonpoor have gained even more, with inequality on the rise. The phenomenon not only includes income level but also access to better health and education.

"Since inequality of human capital is far more permanent and harder to correct, this trend gives cause for concern," according to the recent ADB publication Human Capital of the Poor in Viet Nam, coauthored by Indu Bhushan, Erik Bloom, Nguyen Hai Huu, and Nguyen Minh Thang.

The report is the result of a study conducted for the technical assistance project, Human Capital for the Poor in Viet Nam: Situation and Policy Options, funded by ADB. It provides snapshots of poverty, education, and health of the poor in Viet Nam and tries to explain why and how these changes have occurred. It strongly links poverty to the level of human capital - defined in the study as the level of health and education.

The study used both household survey data and extensive participatory discussions with rural people in Viet Nam. The overall aim of the study is to understand how doi moi has affected the human capital of the poor and their human capital-seeking behavior.

The study found that subsidies in primary education and primary health care are equitably captured, contrary to subsidies in secondary education, higher education, hospital services, and reproductive health services, which are inequitably distributed. The findings will be used in drawing up future programs in Viet Nam.

Top

Central to the analysis are the two Living Standard Surveys - VLSSs - conducted in 1992–1993 and 1997–1998.

These were comprehensive surveys of household living standards conducted within the framework of the World Bank’s Living Measurement Studies. The 1992–1993 survey covered 4,800 households in 240 rural hamlets and 60 urban blocks located in 150 communes throughout the country. The total sample size was 23,839 individuals. Of the original 4,704 respondents in the 1992–1993 VLSS, 4,305 were contacted for the 1997–1998 follow-up survey.

In addition, a participatory poverty assessment, Health and Education Needs of the Poor in Viet Nam, provided the conclusions of the study. Both VLSSs had household and community components. The household component included questions on:

• household composition

• dwelling characteristics

• education

• health

• participation in labor force

• fertility

• agriculture and fishery

• household enterprises

• income

• credit

• household expenditures

"The community survey similarly provided a wealth of information on the characteristics of the community, with detailed information on the operation of social services and economic infrastructure," says Indu Bhushan, ADB Senior Project Economist.

Top

Poverty rates in Viet Nam are highest in rural and mountainous areas in the Mekong River Delta and in the North and Central Highland regions.

Although the Government has played a major role in both health and education since 1945, the people are now expected to pay a significant portion of the cost, with the Government trying to direct its subsidies to the poor. Reforms in the past decade have also brought the private sector into delivering social services.

Doi moi has also affected the financing, quality, and availability of private-sector services, and hence has significantly influenced the use and relevance of health and education services for the poor.

The report said that there was evidence that poverty was concentrated among the people with low human capital—mostly ethnic minorities—and they are likely to remain in that condition until they are able to invest in better health or education.

The quality of education, for example, has many aspects ranging from the availability of textbooks to the interaction between teachers and students.

"Even in fifth grade, my students still make many spelling mistakes. About 50% of my students cannot write their names correctly. School hours in the morning are not enough for them, and at home their parents do not pay much attention to their children’s studies. Textbooks are also a big problem. Only about 5 out of 20 students have enough books," said Ms. Voung, a 24-year-old primary school teacher in an ethnic village, who is quoted in the report.

Top

School is expensive and it can be a real sacrifice for the poor as students have less time to work and contribute to the household. "In a family of three children, the first child should not go to school but should rather stay home to help the household earn more money so that the other children can go to school," according to a women’s group in the Mekong River Delta.

The report noted that households react differently to health problems depending on their income, the cost of services, and their knowledge of good health practices. "The community has better living standards than it did 10 years ago.

Many families have electricity, better houses, and clean water. The health-care system is also better. There are more clinics and more doctors. Wealthy families can call doctors to their house if they can afford the expenses," according to a 50-year-old respondent from the Mekong River delta.

"Before we did not have vaccinations, but in the last 8 years, nurses from the first-aid clinics and hospitals have been coming here to give us injections when we are 6 months pregnant," responded a 25-year-old woman from Central Highlands region.

The report presented several options for improving human capital of the poor that include rationalizing resource allocation to enhance the equity and efficiency of investments in health and education; removing barriers to the use of services by the poor; and strengthening safety nets.

It pointed out that in primary education and health care, where the distribution of subsidies was relatively equitable, government support would clearly help the poor.

The report also proposed that investments in preventive health care, such as programs to reduce malnutrition, should be targeted at the poor. Private sector participation in providing sophisticated tertiary medical care in large cities should be promoted to prevent the crowding out of the poor in public hospitals.

Similarly, resources for secondary education must be redirected to rural and poor areas, and support for targeted investments in reproductive health also needs to be strengthened.

Top

________________________________

Read the news article - Viet Nam's Economy Continues On High Growth Path

Read also - Unequal Benefits of Growth in Viet Nam, Economics and Research Department Policy Brief Series

Learn more about our partnership with Viet Nam

To know more about ADB's activities in Viet Nam, visit our Greater Mekong Subregion site