analysis is needed to answer such questions; nevertheless, the above results can be
used to better target credit at people who are more likely to demand it – those who
are less risk averse and those with higher discount rates.
12.5 The Dynamics of Poverty in Yen Chau District, Vietnam
Vietnam has introduced, mainly under its Poverty Reduction and Hunger Eradication Program, several policies that target poor households with services such as
primary education, housing and subsidized credit. In this section we use data on
household expenditures collected from a random sample of panel households in
2007 and 2010, to analyze poverty dynamics and to identify the level of performance of these policies. The analysis of expenditure data and income poverty was
based on the Living Standard Measurement Survey (LSMS) of the World Bank,
which is described in detail by Grosh and Glewwe (1998; 2000). In accordance with
Decision 170, as issued by the Office of the Prime Minister and which specified
income poverty lines for the period 2006–2010, the Ministry of Labor, Invalids and
Social Affairs (MOLISA) assesses poor households in order to determine how to
best allocate available resources at the local level (MOLISA 2009). As a supposed
means testing method, the MOLISA tool (MOLISA 2007) considers a household
poor if its monthly income per capita is below the established thresholds of 260,000
VND and 200,000 VND for urban and rural areas respectively (The Prime Minister
of Government 2005). These poverty lines have remained unchanged for several
years despite double-digit annual inflation rates; thus, the rural poverty line used in
our analysis was 11,025 VND per day per capita (for 2010), a line that was adjusted
in line with the official consumer price index. Table 12.8 shows the poverty
incidence for three groups of households: the poor – with incomes below the poverty
line, the nearly-poor – with per capita daily expenditures of less than 130 % of the
poverty line (The Prime Minister of Government 2005; 2010) and the non-poor –
who had per capita daily expenditures above 130 % of the poverty line.
The results show that household living standards improved between 2007 and
2010, which is consistent with overall estimates of poverty decline in Vietnam
during this period. As calculated by the GSO, the poverty rates for the whole
country decreased from 15.5 % in 2006 to 10.7 % in 2010; moreover, all three
inequality measures i.e., Theil’T, Theil’L and Atkinson (Haughton and Khandker
2009) reported in Table 12.8 show that poverty inequality was lower in 2010 when
compared to 2007 (Van Dinh forthcoming).
Table 12.9 shows the dynamics of poverty. Households in the period 2007–2010
were split into four categories: the never-poor, those escaping from poverty, those
entering poverty and the chronically poor. These categories were based on changes
in the poverty status of households between 2007 and 2010; for example, the neverpoor households were identified as those not poor in both years, while the entering
12 Policies for Sustainable Development: The Commercialization of Smallholder. . .
479
used to better target credit at people who are more likely to demand it – those who
are less risk averse and those with higher discount rates.
12.5 The Dynamics of Poverty in Yen Chau District, Vietnam
Vietnam has introduced, mainly under its Poverty Reduction and Hunger Eradication Program, several policies that target poor households with services such as
primary education, housing and subsidized credit. In this section we use data on
household expenditures collected from a random sample of panel households in
2007 and 2010, to analyze poverty dynamics and to identify the level of performance of these policies. The analysis of expenditure data and income poverty was
based on the Living Standard Measurement Survey (LSMS) of the World Bank,
which is described in detail by Grosh and Glewwe (1998; 2000). In accordance with
Decision 170, as issued by the Office of the Prime Minister and which specified
income poverty lines for the period 2006–2010, the Ministry of Labor, Invalids and
Social Affairs (MOLISA) assesses poor households in order to determine how to
best allocate available resources at the local level (MOLISA 2009). As a supposed
means testing method, the MOLISA tool (MOLISA 2007) considers a household
poor if its monthly income per capita is below the established thresholds of 260,000
VND and 200,000 VND for urban and rural areas respectively (The Prime Minister
of Government 2005). These poverty lines have remained unchanged for several
years despite double-digit annual inflation rates; thus, the rural poverty line used in
our analysis was 11,025 VND per day per capita (for 2010), a line that was adjusted
in line with the official consumer price index. Table 12.8 shows the poverty
incidence for three groups of households: the poor – with incomes below the poverty
line, the nearly-poor – with per capita daily expenditures of less than 130 % of the
poverty line (The Prime Minister of Government 2005; 2010) and the non-poor –
who had per capita daily expenditures above 130 % of the poverty line.
The results show that household living standards improved between 2007 and
2010, which is consistent with overall estimates of poverty decline in Vietnam
during this period. As calculated by the GSO, the poverty rates for the whole
country decreased from 15.5 % in 2006 to 10.7 % in 2010; moreover, all three
inequality measures i.e., Theil’T, Theil’L and Atkinson (Haughton and Khandker
2009) reported in Table 12.8 show that poverty inequality was lower in 2010 when
compared to 2007 (Van Dinh forthcoming).
Table 12.9 shows the dynamics of poverty. Households in the period 2007–2010
were split into four categories: the never-poor, those escaping from poverty, those
entering poverty and the chronically poor. These categories were based on changes
in the poverty status of households between 2007 and 2010; for example, the neverpoor households were identified as those not poor in both years, while the entering
12 Policies for Sustainable Development: The Commercialization of Smallholder. . .
479