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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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Editors’ Foreword


Vietnam has experienced considerable economic growth and an impressive reduction in poverty over the past two decades. These successes are attributed to the reform program Doi Moi, which entailed a gradual transformation of institutions, and a redefinition of the roles of the state, markets and communities in allocating resources. Agricultural markets were gradually liberalized, user rights were transferred to smallholder farmers for most agricultural land, anti-poverty programs were implemented, and further reforms were undertaken to improve rural households’ access to financial services. The socialistic state apparatus is still present in rural life via the omnipresence of mass organizations, such as farmers’ unions, and women’s unions at the commune and village levels. These mass organizations remain controlled by the party and by the state, and are an important element of social capital in Vietnamese communities.

This thesis is concerned with the development gap observed between lowland and upland areas, and the question of why reforms that have been so successful nationally have not proven as effective in mountainous regions. Indeed, mountainous regions and their inhabitants have lagged behind in the process: the poverty incidence in the Northern Uplands in 2008 was two times that of the rest of the country. Furthermore, income inequalities between lowland and upland areas, and between ethnic minorities and the Kinh majority, have risen. The combination of poverty and the degradation of natural resources remains a primary concern in the area, begging the overall policy question of whether institutional reforms in Vietnam can...

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