Bob Baulch and Vu Hoang Dat INTRODUCTION During the 1990s and 2000s, Vietnam has had spectacular success at reducing poverty. Depending on the poverty line used, nationally representative household surveys show the poverty headcount has fallen by between two-thirds and three-quarters between 1993 and 2006.1 Except for China, there is probably no country in the world that experienced such rapid and sustained reductions in poverty during this period. Vietnam’s poverty reduction record, however, remains fragile. While economic growth of between 7 and 8 per cent per annum in the early 2000s has dramatically improved the living standards of most people, it has also changed the structure of the economy and the nature of risks that people face. Rapid migration and urbanisation, volatility in world markets, an ageing population with a rising incidence of noncommunicable diseases, natural disasters and climate change all confront Vietnam with unprecedented challenges (Joint Donor Group, 2007). The results of recent poverty monitoring exercises suggest that certain subgroups of the population are particularly vulnerable to falling back into poverty (Oxfam and Action Aid, 2009a and b; VASS, 2009). Due to such exercises and the availability of high quality panel data, poverty dynamics as well as poverty trends are recognised as important issues by many policymakers. This paper presents descriptive and multivariate analysis on poverty dynamics in Vietnam using the Vietnam Household Living Standards Surveys (VHLSS) of 2002, 2004 and 2006. After describing the extant literature and panel data used, it discusses its modelling strategy and presents transition...
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