Poverty Dynamics in Rural Vietnam: Winners and Losers During Reform

This paper analyses poverty dynamics in Vietnam during the ‘Doi Moi’ renovation period and tries to identify the winners and losers from the economic and trade reform process implemented in Vietnam in the late 1980s. Our results are based on data available for a panel of 3494 rural households interviewed in 1992-93 and 1997-98. We find that movements in and out of poverty between the two periods vary substantially across population subgroups, suggesting that not everyone benefited equally from the process of reform. We model poverty dynamics using a multinomial logit model that explains movements in and out of poverty between the two periods of time in terms of household characteristics, characteristics directly related to the economic reforms and changes in the returns to those characteristics. The results suggest that changes in household poverty status in Vietnam are correlated with geographic location, access to key institutions and infrastructure, the education level of the head and spouse, as well as changes induced by the economic reform. These results are robust to shifts in the poverty line and changes in model specification. The paper forms part of a wider study funded by the UK Department for International Development that examines the impact of trade reform and trade shocks on household poverty dynamics.