Vietnam has established an impressive track record of growth and poverty reduction over the past decade. How has it managed this? How do Vietnam’s national plans compare with the Poverty Reduction Strategy Paper (PRSP) approved in 2002? This study by the School of Oriental and African Studies of the University of London argues that although substantial scope remains for policy reform, the government has mapped out the general direction of change of its own accord and has taken concrete steps towards realising its stated objectives.
Vietnam has managed to achieve impressive growth rates during the transition period, despite the absence of substantial flows of overseas aid. Since the late 1980s, Vietnam has moved from a food deficit to surplus, penetrated a wide range of export markets for agricultural products and manufactured goods, restored price stability and increased the share of savings and investment in national income. Living standards have improved dramatically and the government, largely on its own initiative, has dedicated an increasing share of government expenditure to poverty reduction and social welfare.
Although Vietnam is still a poor country, it is neither aid dependent nor highly indebted. The government has, for the most part, pursued prudent fiscal and monetary policies and has adjusted to external shocks such as the East Asian financial crisis. Vietnam has re-integrated into the world economy and has diversified exports in a short period of time. The government has assigned a high priority to poverty alleviation and linked poverty reduction to growth long before the advent of the PRSP.
These rather unique initial conditions shaped the aims and content of the Poverty Reduction Strategy (PRS) in Vietnam.
- Vietnam’s growth and poverty reduction record, combined with the country’s manageable external debt and healthy export growth, afforded the government an unusual degree of bargaining power vis-à-vis the multilateral organisations.
- The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) process in Vietnam was an unprecedented attempt to improve the quality of national planning and to focus on the related objectives of economic growth and poverty reduction.
- Donors and international Non-governmental Organisations (NGOs) united behind the process as a mechanism to increase accountability and transparency, to enhance aid co-ordination and to improve linkages between macro-policy and poverty reduction goals.
- The process introduced a number of innovations, including participatory poverty assessments and local consultations, explicit targets and formal monitoring and evaluation systems.
- It also introduced government-donor-NGO fora to exchange information and intensify the policy dialogue and collaborative planning mechanisms at the central level.
These are important gains. Improving the quality of national planning is vital to sustaining and accelerating the rate of economic growth and poverty reduction in Vietnam.
- The CPRGS should be viewed as a contribution to the long-term process of change in Vietnam’s institutions of planning, representation and governance.
- The CPRGS is not the end of the process. Substantial scope exists for improving on the Socio-Economic Development Strategy-based planning system.
- The CPRGS could have a long-term impact in three broad areas: participation, poverty-growth linkages and results orientation. Whether this is achieved depends largely on domestic political dynamics.
- Donors, lenders and International NGOs can contribute through interventions to reinforce positive momentum for change.
