Growth and poverty reduction in Vietnam: A strategic policy modelling study

Van Hoa Tran; Quang Thao Pham; Van Hoa Tran; Quang Thao Pham

doi:10.3934/NAR.2024020

National Accounting Review

2024, Volume 6, Issue 3: 449-464. doi: 10.3934/NAR.2024020

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Research article

Growth and poverty reduction in Vietnam: A strategic policy modelling study

Van Hoa Tran ^{1
,
,},
Quang Thao Pham ²

1.
Centre for Strategic Economic Studies, Victoria University, Australia, Level 13,300 Flinders St, Melbourne, VIC 8001, Australia
2.
Vietnam Union of Science and Technology Associations, Vietnam

Received: 11 June 2024 Revised: 10 September 2024 Accepted: 19 September 2024 Published: 30 September 2024
JEL Codes: C36, C54, F14, F43, O11

A major objective of economic development or growth is poverty reduction, and it is especially a high priority in developing, low-income economies such as Vietnam. Vietnam is an important transition open high-growth economy since Doi Moi in 1987 and with increasing global geopolitical influence in South East Asia but with concerning high poverty incidence. While poverty is recognised internationally as a multidimensional incidence with interdependent relationships among the country's many activities in the sense of Marshall or Haavelmo, rigorous studies with focus on these multidirectional causality issues for Vietnam are currently very limited. The paper addresses these issues by introducing an endogeneity or simultaneous multi-equation modelling approach with World Bank and other international data and system estimation to studying the growth-poverty relationship with Vietnam as a case study. The objective is to explore empirical evidence for this causal relationship with an economy-wide transmission mechanism and with common causality postulates for the improvement of sustainable growth and poverty reduction strategic policy analysis. The main findings show growth-poverty circular causality and the strong impact of growth on poverty reduction and of trade openness on growth. The approach advances the literature, and the findings are also a useful guide for aid consultants, economic researchers, policy makers, nongovernment organizations (NGOs), and official development assistance (ODA) donors in Vietnam in particular and in developing countries in general.
- growth,
- poverty reduction,
- transition economies,
- strategic economic policy modelling
Citation: Van Hoa Tran, Quang Thao Pham. Growth and poverty reduction in Vietnam: A strategic policy modelling study[J]. National Accounting Review, 2024, 6(3): 449-464. doi: 10.3934/NAR.2024020

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Abstract

A major objective of economic development or growth is poverty reduction, and it is especially a high priority in developing, low-income economies such as Vietnam. Vietnam is an important transition open high-growth economy since Doi Moi in 1987 and with increasing global geopolitical influence in South East Asia but with concerning high poverty incidence. While poverty is recognised internationally as a multidimensional incidence with interdependent relationships among the country's many activities in the sense of Marshall or Haavelmo, rigorous studies with focus on these multidirectional causality issues for Vietnam are currently very limited. The paper addresses these issues by introducing an endogeneity or simultaneous multi-equation modelling approach with World Bank and other international data and system estimation to studying the growth-poverty relationship with Vietnam as a case study. The objective is to explore empirical evidence for this causal relationship with an economy-wide transmission mechanism and with common causality postulates for the improvement of sustainable growth and poverty reduction strategic policy analysis. The main findings show growth-poverty circular causality and the strong impact of growth on poverty reduction and of trade openness on growth. The approach advances the literature, and the findings are also a useful guide for aid consultants, economic researchers, policy makers, nongovernment organizations (NGOs), and official development assistance (ODA) donors in Vietnam in particular and in developing countries in general.

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