UNDP Report praises Viet Nam for Rapid Poverty Reduction

Jul 9, 2003

Ha NoiViet Nam has achieved impressive progress in poverty reduction and human development over the last decade and is well on track to achieving the Millennium Development Goals (MDGs), says the global Human Development Report 2003, the annual, independent report commissioned by UNDP and released yesterday.

The Human Development Report introduces a new plan of action—the Millennium Development Compact—to achieve the MDGs. The Goals, endorsed by all members of the United Nations, set out a series of time-bound and quantifiable targets ranging from halving extreme poverty to halting the spread of HIV/AIDS by 2015.

Viet Nam's Human Development Index (HDI) remains at 0.688, enabling Viet Nam to maintain its medium development ranking of 109 out of 175 countries. Last year, Viet Nam ranked 109 but out of 173 countries.

“Pakistan and Viet Nam have similar incomes, but Viet Nam has done much more to translate its income into human development”, notes the Report.

Viet Nam has seen considerable rise since 1985 of its Human Development Index (HDI), which measures achievements in key areas of human development, such as standard of living, health and education. Viet Nam's HDI has continued to steadily improve since the mid-1980s, from 0.583 in 1985 to 0.605 in 1990, 0.649 in 1995 and 0.688 more recently.

On the basis of the HDR’s Human Poverty Index, which attempts to assess the percentage of the population suffering from a variety of basic deprivations and which ranks 94 developing countries for which adequate data is available, Viet Nam ranks 39 out of 94 countries in this year’s Report.

Viet Nam, thanks to key reforms, has made remarkable progress across a broad range of socio-economic development measures. The most impressive is the fall in the poverty rate from well over 70% in the mid-1980s to around 29% of the population in 2002 - one of the sharpest declines of any developing country on record.

Much of this reduction can be traced to the high annual economic growth rates of the country in the early 1990s (8-9%) and specifically to Viet Nam’s strong agricultural performance since the late 1980s. Enacted in 2000, the Enterprise Law, which has created more than 60,000 businesses and 1.5 million jobs, has also significantly contributed to reducing poverty by opening up the domestic private sector and off-farm employment. This is an area that needs to growth further if Viet Nam is to sustain the pace and balanced spread of economic development.

In this regard, the Report argues that investment in industries and businesses that create jobs, such as manufacturing and textiles, are more important for human development than industries that require large amounts of capital, such as oil exploration and production. The Report also calls for special initiatives to support small businesses and entrepreneurs in developing countries.

Kanni Wignaraja, UNDP Resident Representative a.i. notes: “Just as the initial success of doi moi was based on the liberalization of the non-state farm sector, the next frontier appears to be the liberalization of the non-state business sector.” Future success will likely be based on a further liberalization of choices facing people in the non-state sector through further policy, legal and institutional reform, while at the same time reaching out to the remaining poor, often in the most isolated parts of the country. “It is essential that national resources continue to be focused on improving the health and education standards in the poorest communes, with increased public investment in these sectors,” she says.

The Report calls on developing country governments to prioritize spending on the basic services that poor people need most: primary schools, not only universities; rural clinics, not only technologically advanced hospitals in big cities. “Poor countries cannot afford to wait until they are wealthy before they invest in their people,” said Jeffrey Sachs, Special Adviser to the UN Secretary-General on the Millennium Development Goals, and a guest contributor to this year’s Human Development Report.

UNDP research shows that future progress on poverty reduction and achievement of other MDGs in Viet Nam will be increasingly difficult to achieve due mainly to isolation of the remaining poor -- not just geographic isolation, but also social isolation, linguistic isolation, ethnic isolation and even isolation from useful information.

According to Ms. Wignaraja, learning from Viet Nam’s past successes provides valuable lessons for its future development trajectory. She pointed to the early investments in human capabilities, especially through broad-based literacy campaigns and basic education programmes, which laid the foundation for the future success of the doi moi reform process launched in 1986. These are no less relevant today, but they must be combined with the specific technical skills, management training and upgrading of rural education and facilities, to ensure a well educated, healthy and entrepreneurial rural population, that participates fully in the development decisions that affect their lives.

Viet Nam: Achievements in selected Millennium Development Goals

  • Viet Nam ranks 89th out of 144 countries in the Gender-related Development Index (GDI) which is at 0.687, putting the country among the best performers in the region. The GDI measures a nation’s achievement in the same dimensions as the HDI, but is adjusted to account for gender disparities. Viet Nam has the highest percentage of female political participation in the region with 27.3% of parliamentary seats held by women.
  • Viet Nam has progressed relatively quickly towards eliminating hunger and the goal seems to be within reach. However the ratio of undernourished people is higher for Viet Nam (18%) than the regional average (10%).
  • Under 5 child mortality, Viet Nam’s progress (38/1000 life birth) is close to the regional average (43/1000).
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