Poverty Reduction in Vietnam, 2001-2005: Trickle-Down Effect or PRSP Effect?

Vietnam is one of the few countries which implemented PRSP in Southeast Asia, and its poverty reduction after the introduction of Doi Moi policy has been remarkable. Many, including IMF and the World Bank, praise the success of the poverty reduction in Vietnam. However, the question whether the success could mostly be attributed to the installation of the PRSP scheme or not requires careful examination since the full-PRSP was approved only in 2002 as an action plan of already enacted Ten Year Socio-Economic Development Strategy for 2001-2010 and Five Year Socio-Economic Development Plan for 2001-2005. Moreover, the PRSP for Vietnam was named Comprehensive Poverty Reduction and Growth Strategy (CPRGS), and thereby the government made it clear that poverty can not be reduced without economic growth. The present paper tries to answer the question through the analysis of the regional differences of poverty reduction for the period of 2001-2005. It examines the impacts of industrialization, state budget expenditure, and poverty focused policies on poverty reduction. The paper concludes that the poverty reduction in Vietnam in the period of CPRGS was caused mainly by the trickle down effect, and the role of the installation of PRSP scheme was supplementary.