Actualité scientifique
Scientific news
October 2010
With 25 million of its people
pulled out from deprivation
and one of the world’s
fastest growth rates, in less
than 20 years Vietnam has
seen a spectacular
decrease in poverty. IRD
scientists from the research
unit UMR Développement,
institutions et
mondialisation1 and their
partners2 have studied this
success story. The great
economic reform Doi Moi3
or “Renovation”, was
launched in 1986 and was
the stimulus behind the
country’s growth.
Subsequently the country
implemented measures for
budget redistribution from
the richer regions to the
poorer ones and targeted
financial aid schemes for
the most deprived sections
of society.
Working people’s economic
insecurity is a persistent
problem, however. This is
one of the remaining
gloomy sides of the
Vietnamese economy. Many
work in the informal4 sector.
In fact currently there are
more than 10 million
operating as street vendors,
tradesmen or involved in
other informally organized
occupations. Such activities
represent 50% of the
country’s labour market,
agriculture excepted.
The main challenges now
are to reduce inequality
even further and beat
insecurity. Tackling these
would enable Vietnam to
reach the level of the
industrialized countries.
Vietnam:
an “Asian miracle”?
© IRD / Marie-Noëlle Favier
N° 359
Actualidad cientifica
Far-reaching economic reform, run on an export-based growth model combined with redistribution of wealth, has enabled Vietnam to reduce poverty since the
early 1990s and to appear among the emerging countries.
Is Vietnam, on its scale, a representative of the
Asian Miracle, akin to the continent’s four tigers
-Hong Kong, Singapore, Taiwan and South Korea?
IRD scientists from research unit UMR Développement, institutions et mondialisation 1 and their
partners2 have studied the economic policies which
have enabled that country to raise itself up, after
decades of war followed by years of severe
economic problems.
Vietnamese success story
Since the early 1990s Vietnam has experienced a
spectacular decrease in poverty. The percentage of
the Vietnamese population living below the poverty
line fell from 58% in 1993 to 14.5% in 2008. Twentyfive million people have thus emerged from poverty
in 15 years. In urban areas in 2008, only 3.5% of the
population is considered to be poor, even though the
cost of living continues to rise.
Vietnam owes its people’s increase in wealth to the
remarkable economic growth it has achieved over
the past 20 years, one of the fastest in the world.
The country thus recently entered the sphere of the
emerging countries.
A “socialist” form of capitalism
How has Vietnam managed so successfully in
playing the capitalist game? The adoption in 1986 of
Doi Moi3, Vietnamese for “Renovation”, marked the
country’s conversion to a particular model, a “socialist-based market economy”. A dynamic private
sector then built up alongside a strong public sector.
The public powers maintained control over whole
areas of the economy such as energy, industry and
banks. The State also continued to be highly active
in running certain public policies (for agriculture,
industry, planning and so on) and pursued price
regulation for basic products and so on.
Vietnam founded its drive forward on export-based
growth and rapidly joined the international economy.
Now it is the world’s top exporter of both Robusta
coffee and pepper and second among clothing
exporters to the American market. And it now takes
an active part in international bodies. In January
For further information
2007, the country became the 150 member of the
World Trade Organization.
th
Distributed wealth
However, the beneficial effects of the economic
boom are not to the advantage of all Vietnamese.
The Kinh5 majority is more strongly favoured than
the ethnic minorities, most of whom live in the mountains or other remote areas, where poverty is still
rife. To alleviate a potential rise in inequality, Vietnam
pursues an ambitious policy of budget transfer from
rich to poor regions. The wealthier areas transmit up
to three-quarters of their receipts to the more
deprived ones, for which these transfers can amount
to half their GDP. This redistribution enables the
poorer regions to develop their infrastructure (such
as education, health, electricity, road network, water
supply and drainage networks) and provide health
cover and other social services.
These strategies led to improvement in the human
development indicators. Schooling rate in primary
has reached nearly 100%, life expectancy rose from
63 years 1990 to 68 in 2005 for men and from 67 to
73 for women. Vietnam is even ahead of schedule in
its drive to meet the 2015 target for achieving the
Millennium Development Objectives.
Persistent insecurity
To beat poverty completely, the country still has a
number of challenges to meet. One in particular
concerns the reduction of the informal4 sector, which
operates like a parallel economy and maintains a
high level of insecurity. This involves street vendors,
tradesmen, domestic services and so on. In Vietnam
over 10 million people who run small-scale businesses, practising without making any official declaration. The global financial crisis has on the whole
been absorbed by the Vietnamese economy, but it
has destroyed a large number of jobs and indeed
reinforced the informal sector, where unfortunate
working people have found refuge. This sector
constitutes, agriculture excepted, 50% of the labour
market and generated an estimated 20% of GDP.
Some means of combating these trends exist, such
as microcredit, or training. The research team
observed, however, that their impact was still limited
and short term. For this reason they recommend
that support be provided for the informal sector as
it is, with for example the setting-up of a social
security system for workers in this informal sector.
The government indeed recently adopted such a
scheme.
Contacts
Jean-Pierre CLING,
director of research
hosted by the IRD
jean-pierre.cling@ird.fr
Mireille RAZAFINDRAKOTO,
chargée de recherche à l’IRD
mireille.razafindrakoto@ird.fr
François ROUBAUD,
research associate at the IRD
françois.roubaud@ird.fr
UMR Développement, institutions et
mondialisation – DIAL (IRD / Université
Paris-Dauphine)
Adress
IRD Vietnam
Quartier diplomatique de Van Phuc
App. 202, Bât 2G
298 Kim Ma, Ba Dinh
Hanoi, Vietnam
Tél. : (844) 37 34 66 56
The informal sector is the primary generator of jobs.
However, it is still largely neglected in the Vietnamese government’s policies, owing to insufficiency of official data. The research conducted is
shedding light on the parallel economy. If Vietnam
continues along this line and succeeds in combating
informal workers’ insecurity and in reducing poverty
among the ethnic minorities, in one generation it
could join the sphere of the industrial countries.
Reference
Lagrée S., Cling Jean-Pierre,
Razafindrakoto Mireille, Roubaud
François (dir.). Stratégies de
réduction de la pauvreté : approches
méthodologiques et transversales.
Hanoi : Tri Thuc, 2010, p. 263-368.
Les journées de Tam Dao : université
d’été en sciences sociales 2009, Hanoi
(VNM), 2009/09/18-26.
Copy editor – Gaëlle Courcoux - DIC, IRD
Key words
Vietnam, poverty, informal employment
Translation – Nicholas FLAY
1. UMR DIAL (IRD / Université Paris-Dauphine)
2. The investigations were conducted jointly in the Vietnamese General Statistics Office. They were presented as part of the Tam Dao
Summer School/Uni co-organized annually by the Vietnam Academy of Social Sciences along with the IRD, AFD (Agence Française
de Développement), AUF (Agence Universitaire de la Francophonie) and EFFEO.
3. Doi Moi is a major economic reform the Vietnamese Communist Party has been running since 1986, combining capitalism with a
strong degree of State intervention.
Coordination
Gaëlle Courcoux
Délégation à l’information
et à la communication
Tel.: +33 (0)4 91 99 94 90
Fax: +33 (0)4 91 99 92 28
fichesactu@ird.fr
4. The informal sector consists of all undeclared economic activities which therefore avoid State control and regulation.
5. Kinh is the official designation for the Viet, ethnic group originating from the North of present-day Vietnam and Southern China. The
Kinh make up over 80% of the country’s population.
The global financial crisis has increased the weight of the informal sector in the labour market. Vietnam now has more than 8 million street vendors, traders and
other undeclared workers, for whom the challenge is to reduce the high level of insecurity.
© IRD / M. Razafindrakoto
© IRD / M. Razafindrakoto
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