Vietnam - Poverty and wealth

In 1999, average GNP per capita in Vietnam was only US$370, giving Vietnam the rank of 170th in the world on this indicator. This statistic, however, is quite misleading, since it does not reflect differential costs of living in different countries and societies. It is much more meaningful to think in terms of GNP per capita being 5,365,000 dong and then to assess what can be purchased locally with that amount of income. The World Bank has made such adjustments and the estimated GDP per capita (in terms of purchasing power parity ) is a much higher $1,950. In 1998, it was estimated that 37 percent of the population was living below the poverty line, though this estimate seems too high and may not adequately reflect local purchasing power.

Rapid economic development in Vietnam has not been accompanied by worsening income distribution, as is common in many other countries at this stage of development. One reason for this outcome is the commitment of the government of Vietnam to target basic and key services to alleviate poverty, spread literacy, and improve health for individuals in all provinces in all areas of the country. A significant portion of revenues generated in the richer provinces are redistributed to poorer, more disadvantaged provinces. Such a policy reflects the government's commitment to prevent large regional disparities and social injustices. However, some researchers have found increasing gender inequality.

A major economic problem facing the Vietnamese economy is the large number of individuals who are unemployed or underemployed . This problem is exacerbated (made worse) by several factors: the improvement of agricultural productivity and limited land for expansion has driven farmers off the land; the reduction in the

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Vietnam N/A N/A 183 206 331
United States 19,364 21,529 23,200 25,363 29,683
China 138 168 261 349 727
Thailand 863 1,121 1,335 2,006 2,593
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Vietnam
Lowest 10% 3.6
Lowest 20% 8.0
Second 20% 11.4
Third 20% 15.2
Fourth 20% 20.9
Highest 20% 44.5
Highest 10% 29.9
Survey year: 1998
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

size of the state sector; and Vietnam's historically rapid population growth rate and young population. Despite the excellent macroeconomic success of the economy in the 1990s, it is insufficient to generate adequate numbers of jobs for new entrants to the labor force. Also, over the next several years state-owned enterprises are expected to reduce employees as part of Vietnam's continuing economic reform process. In July 2001, a freeze on the establishment of new state companies was announced. The unemployment rate in 1995 was estimated to be an extremely high 25 percent. In 1996, an estimated 2 million rural residents migrated to the cities in search of employment (approximately 7 percent of the nation's work-force). The National Assembly has set a strategic target to create 1.4 million new jobs. The major source of new jobs will be from private sector development.

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