Markets, inequality and poverty in Vietnam

Using the Vietnam Living Standards Surveys 1992-93 and 1997-98, this paper examines the impact of market reform on inequality and poverty in Vietnam with a focus on the locational aspects. In addition, this paper investigates the effect of market reform by comparing Vietnam with other socialist and developing countries. Comparison between the two surveys indicates that overall inequality in Vietnam has risen slightly with signs of a widening gap between urban and rural sectors. There is evidence of a similar disparity between regions. Within-sector/region accounts for most of the inequality in Vietnam at any one point in time. Nonetheless, between-groups differences (urban-rural and regional) have constituted the major source of the rise in inequality over time. Market reforms have also substantially reduced poverty in Vietnam. Vietnam has become one of the best performers among the developing countries. However the reduction of poverty in rural areas has lagged behind that in urban areas. The reduction of rural poverty is the key to combating poverty in Vietnam.