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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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Vietnam’s economic achievement over the last two decades constitutes one of the most successful development stories of the last century. The Doi Moi reform program voted in 1988 gradually led the transition from a centrally-planned to a market-oriented system through the liberalization of markets, the individualization of land access, among other reforms. It has permitted high economic growth rates in all sectors of the economy, and led to massive reduction of poverty in the country. Yet, successes have not taken place evenly through the country. Mountainous regions and ethnic minority groups have lagged behind in this process, and the poverty incidence in the Northern Uplands was still twice as large in 2008 than in the rest of the country (31.6% against 14.5% for the whole country). There in addition, the rapid population growth combined with the intensification of agricultural systems in fragile ecosystems have considerably increased pressure on natural resources, and thereby accentuated the risk for the economy to get trapped in a vicious circle whereby environmental degradation and poverty mutually reinforce each other and durably undermine economic development. The poverty-environment nexus or the set of complex linkages relating poverty and the environment imply that in fragile ecosystems, equity, economic growth and environmental sustainability can no longer be treated as separate objectives but must be jointly addressed in order to enable sustainable development in mountainous areas.

Drawing on a conceptual framework that highlights the role of institutions in the poverty-environment nexus, this thesis examines the sources...

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