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Microeconomic Impacts of Institutional Change in Vietnam’s Northern Uplands

Empirical Studies on Social Capital, Land and Credit Institutions

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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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6 Ethnic heterogeneity and the formation of social capital in rural communities of Northern Vietnam

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6. Ethnic heterogeneity and the formation of social capital in rural communities of Northern Vietnam

Abstract

Using data from rural communities in which ethnic heterogeneity was induced within through involuntary resettlements policies in the 1960s, we estimate the exogenous effect of ethnic heterogeneity on individual participation in local organizations and households’ social network capital. The effect on participation depends on organizations’ political nature and the public nature of managed goods. We find no direct impact on social network capital but an indirect effect through interactions with identity and participation. Results do not confirm theoretical predictions of a negative relationship but show that ethnic heterogeneity can encourage bridging connections, and, as such, foster innovation and economic development.

6.1 Introduction

Over the past decade, rural communities have been recognized increasingly more by scholars and practitioners as essential actors in economic development, and have been given greater influence over the design and implementation of development policies and projects. The so-called decentralized and community-driven development projects represent, according to Mansuri and Rao (2004), about US$7 billion of the World Bank’s portfolio. In Vietnam as well, after decollectivization in 1988, communities have been entitled to a central role in the implementation of anti-poverty policies, infrastructure development projects, and other reforms such as land allocation. This trend is based on the belief that communities, thanks to better information access and higher enforcement capacities, have a comparative advantage, when it comes to allocating resources and...

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