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Reform, growth, and poverty in Vietnam

  • Dollar, David

Vietnam grew rapidly in the 1990s, and yet by many measures it has poor economic institutions. Dollar seeks to explain this apparent anomaly. Between the 1980s and 1990s Vietnam carried out significant economic reforms, notably stabilization, the introduction of positive real interest rates, trade liberalization, and initial property rights reform in agriculture. Relating these changes to the empirical growth literature, the author finds that Vietnam's growth acceleration is about what would be predicted. Conditional convergence also suggests that the country's high growth rate will decelerate unless further reforms are taken. The author then looks at the level of institutional and policy development in Vietnam compared with other emerging market economies. While Vietnam's policies have improved, they did so starting from a very low base. So, it can be simultaneously true that Vietnam's policies have improved a lot and yet are rather poor in comparative perspective. A comparison of governance indicators, financial sector issues, and the infrastructure of international integration reveals serious institutional weaknesses in Vietnam that need to be addressed if a high growth rate is to be sustained.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2837.

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Date of creation: 31 May 2002
Date of revision:
Handle: RePEc:wbk:wbrwps:2837
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  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  3. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  4. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-82, May.
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  6. repec:umd:umdeco:rodriguez9901 is not listed on IDEAS
  7. Francesco Caselli & Gerardo Esquivel & Fernando Lefort, 1997. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Working Papers Central Bank of Chile 03, Central Bank of Chile.
  8. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
  9. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  10. Easterly, William & Fischer, Stanley, 2001. "Inflation and the Poor," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 160-78, May.
  11. Padma Desai (ed.), 1997. "Going Global: Transition from Plan to Market in the World Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262041618, June.
  12. Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile 56, Central Bank of Chile.
  13. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
  14. Francisco Rodriguez & Dani Rodrik, 1999. "Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence," NBER Working Papers 7081, National Bureau of Economic Research, Inc.
  15. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  16. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
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