New book identifies winners and losers of Viet Nam's Economic boom

Jan 3, 2002

HA NOI -  Despite the rapid economic growth and dramatic fall in poverty of the 90s, the economic boom had winners as well as losers, and income inequality widened in Viet Nam, says a new book, launched today by the General Statistical Office (GSO) in collaboration with the United Nations Development Programme (UNDP).

"Living Standards during an economic boom - The case of Viet Nam", the fruit of the contribution from more than 50 national and international researchers, is basically the first book that systematically utilizes the full richness of the Living Standards Surveys undertaken by GSO in 1993 and again in 1998 with the support of UNDP, SIDA and the World Bank.

According to the book, 10% of households jumped at least two quintiles in their position of the expenditure distribution between 1993 and 1998 - the "shooting stars" - and on average their real per capita expenditures rose by 173%." At the other end were the "sinking stones ," which fell at least two quintiles and saw their spending shrink by 34% on average over the same period.

Becoming a shooting star is not a strike of luck but depends mainly on changes in earnings per hour worked. 60% of the increase occurred as a result of higher wages and salaries." When the 1993 Survey was taken, for example, a potential shooting star had annual expenditure of 1,156,000 dong ($94). Five years later, this number was 3,156,000 dong ($257) or an increase of 2,000,000 dong. On the other hand, a household becomes a sinking stone mainly because of a huge reduction in earnings per hour worked.

Income also rose because household workers put in more hours of work per year. On average, working household members toiled for about 400 more hours per year in 1998 than in 1993." Surprisingly, the increase was slightly greater for sinking stones than for shooting stars" perhaps they were putting in more effort in order to compensate for the drop in earnings per hour worked ˙ but also because those households found themselves with more dependents per worker."

Caught between the shooting stars and sinking stones are the households in the middle, whose per capita expenditure level rose by 43% in real terms between 1993 and 1998.ó This is a large increase, but it is somewhat less impressive taking into account that 55% of the rise is because household workers were working more hours per year.

The book also shows that demographic factors such as household size do have some influence whether a household is a shooting star or not.ó But perhaps more striking are the strong geographic effects: households are more likely to be shooting stars if they live in urban areas, and if they are close to schools and roads.

A greater proportion of the population were shooting stars in the Red River Delta (which is centered on Hanoi) and the Central Highlands (where coffee cultivation boomed), than elsewhere, although the proportions were almost as high in the Southeast and the North Central Coast." Unexpected is the high proportion of sinking stones in the Mekong Delta, a comparatively affluent region that nonetheless has pockets of very deep poverty."This may be due in part to the significant number of landless workers in the region, a group that was particularly hard hit by the sharp rise in the relative price of food between 1993 and 1998.

Disasters also hurt, and sinking stone households were far more likely to be hit by a flood, drought, or invasion of pests than were shooting stars."The book stresses the importance of disaster management as a way to alleviate risks of this type.

Shooting stars are more likely to live in the 'right' place -near the road, factory, school while a high proportion of the sinking stones are concentrated in remote areas. Ethnic minority households incomes are almost 40% below the national average. The book suggests tackling the problem of remoteness, by building all-weather roads and providing schools.

While there is no reason to limit income mobility, according to the book, the growing gap between rich and poor concerns development experts, who warn that it would threaten social cohesion, as those left behind by the economic boom would feel increasingly marginalized and alienated.

ËThe Government and the Vietnamese people have done an impressive job in reducing poverty over the past 15 years. Still, there is a need to intensify efforts to reach out to the poorest of the poor in the most remote and isolated areas of the country. Much more effort is still needed to ensure that the poor genuinely participate in and benefit from the economic boom", said Jordan Ryan, UNDP Resident Representative.

Contact informationDang Huu Cu
Tel: (84 4) 942 1495 ext. 179 Fax: (84 4) 942 2267