Growth, inequality and the future of poverty reduction in vietnam

Abstract

Vietnam's economy over the past decade grew at one of the highest rates in the world. The broadly based nature of this growth sent tumbling by over 20% points the proportion of the population falling under an internationally comparable poverty line. Yet this growth has also generated increases in income inequality which, by some measures, threaten to give Vietnam one of the highest Gini coefficients in Southeast Asia within 10 years. This paper examines the dynamic interconnections between growth and equity over Vietnam's transition to a market economy. It argues that the sustainability of Vietnam's achievements in reducing poverty is not assured, since greater inequality may undermine both the efficiency with which future growth will reduce poverty and make it politically more difficult to pursue pro-poor policies. The paper reviews the current state of Vietnam's reform agenda, as it affects prospects for achieving equitable growth in the medium-term. © 2002 Elsevier Science Inc. All rights reserved.