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Microeconomic Impacts of Institutional Change in Vietnam’s Northern Uplands

Empirical Studies on Social Capital, Land and Credit Institutions


Camille Saint-Macary

The Doi Moi reforms initiated in Vietnam in 1986 to lead the transition from a centrally-planned to a market-oriented economy have entailed deep institutional transformations. At the national level, achievements have been impressive, the high economic growth in all sectors of the economy have permitted to divide poverty incidence by three in the country since 1993. Mountainous regions and its inhabitants, however, have lagged behind in the process. There, the combination of poverty and the degradation of natural resources remains a pressing issue. Drawing on a conceptual framework that highlights the determinant role of institutions in the poverty-environment nexus, this book investigates the sources of success and failure in the current institutional framework to address objectives of equity, economic growth and environmental sustainability in Vietnam’s mountains. The empirical investigation uses an original dataset collected in a rural district and examines three critical dimensions: the definition of land rights, the functioning of credit markets, and the formation of social capital.
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1 Introduction


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1. Introduction

1.1 General introduction

Vietnam’s economic achievement over the past twenty years constitutes one of the most successful development stories of the last century (Glewwe et al., 2004). Classified among the world’s poorest countries at the end of the 1980s, Vietnam is now expecting to join the list of industrialized countries by 2020 (ADB, 2006). After a decade of remarkable success in the 1990s1, Vietnam has continued to progress in 2000–2010, and is ranked among the fastest growing economies of this decade (with an average annual growth rate of the Gross Domestic Product (GDP) of 7.3% between 2000 and 2012 (World Bank, 2011))2. Moreover, economic growth has been pro-poor. The latest estimates from the Vietnam Household Living Standard Survey (VHLSS) indicate a nation-wide poverty incidence in 2008 of 13.1% (share of population living with less than 1.25 US$ in Purchasing Power Parity), a dramatic reduction from 49.7% in 1998 and 63.7% in 1993 (GSO, 2011).

The transformation of institutions has been at the heart of Vietnam’s transition strategy, and according to many observers, is a major key to the country’s success (Macours and Swinnen, 2002; Cornia and Popov, 2001; Montes, 2001; Rozelle and Swinnen, 2004; Ravallion and van de Walle, 2008b). The Doi Moi 3 reform program was enacted in 1986 at the VIth congress of the the communist party to guide the transition from a centrally planned economy to a market-oriented system. Most of the reforms were...

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