Impacts of the sectoral composition of growth on poverty reduction in Vietnam

Abstract:

Purpose
The purpose of this paper is to assess the impact of sectoral economic growth and other factors on poverty reduction in Vietnam in the period 2010–2016.

Design/methodology/approach
Originating from the question of whether there is an endogenous problem between the structure of economic growth by sector and some other factors in the process of impact on poverty reduction, the paper has used the 2-Stage Least Squares method to deal with the endogenous issues.

Findings
Increasing the proportion of the industrial sector and the agricultural sector had great impacts on poverty reduction. In contrast, the increasing proportion of the service sector made the poverty rate higher. One noticeable thing is that economic growth was not significant for the goal of poverty reduction in 2010–2016. In addition, the process of urbanization, the increase in the labor rate and literacy rate contributed positively to poverty reduction achievements. Finally, population growth was also one of the reasons hindering Vietnam’s successful poverty reduction process.

Practical implications
Accelerating the process of economic restructuring in the direction of increasing the proportion of the industry is accompanied by more attention to agricultural development than the service sector. Employment creation policies should be promoted. Maintaining population control by educating poverty reduction awareness for the poor will have a positive effect on long-term poverty reduction.

Originality/value
Research on the growth structure by sector affecting poverty reduction in Vietnam is still relatively limited. The study of relationships in the context of endogenous existence is still quite limited in Vietnam. Therefore, this paper has focused on the question of sectoral economic growth affects poverty in the interrelation among sectors in the process of economic development.