Asian Dynamism and Vietnam’s CPRGS

August 30, 2002Izumi Ohno

National Graduate Institute for Policy Studies

Background • Diverse approaches to poverty

reduction– Strategic alternatives– Options for institutional arrangements

• Poverty Reduction Strategy Paper (PRSP) in East Asia?

• Vietnam’s CPRGS as a model for growth-oriented poverty reduction

Why Vietnam?

• Vietnam’s CPRGS: widely recognized as “good practice” because of strong country ownership

• PRSP renamed to “Comprehensive Poverty Reduction & Growth (CPRGS) Strategy”

Why Vietnam? (contd.)

• First East Asian country to complete Full-PRSP (May 2002)

• Different perspective from the early PRSPs

Agenda

1. PRSP Overview2. Main Features of Vietnam’s

CPRGS3. Asian Dynamism as Key Factor4. Japan’s Development

Cooperation to Vietnam

1. PRSP Country Status

• 61 countries engaged in PRSP process [as of Aug. 2002]

• 18 completed Full-PRSP o/w ： 12 Africa, 4 LAC, 1 ECA, plus 1 EA (=Vietnam)o/w: 15 linked to “Enhanced HIPC Initiative”

PRPS Countries by Progress

4

1

1

1

11

1

7

1

3

17

2

3

2

7

No. of countries

Full- PRSP

Interim- PRSP

before Interim- PRSP

Africa (35)

East Asia (6)

South Asia (4)

Europe &Central Asia (10)

Middle East & North Africa (2)

Latin America &Caribbean (4)

PRSP Countries by HIPC Status

1

5

3

17

1

7 2

1

1

10

4

4

1

4

No. of Countries

HIPC Completion Points reached

HIPC Decision Points reached

HIPC Decision Points not yet reached

HIPC Sustainable Cases

Non-HIPC

Africa (35)

East Asia (6)

South Asia (4)

Europe & Central Asia (10)

Middle East &North Africa (2)

Latin America &Caribbean (4)

2. Features of Vietnam’s CPRGS

• 3 key criteria for localizing PRSPs1. No direct linkage with enhanced debt r

elief program, and low aid dependency2. National development strategy, guiding

budget & PIP3. Relatively high social achievements, bu

t underdeveloped economy

Burkina Faso

Ghana

Mauritania

Mozambique

Uganda BoliviaHonduras

Mongolia

Nepal

Kenya

Tanzania

Zambia

Nicaragua

Bangladesh

Cambodia

Indonesia

Laos

Pakistan

Sri Lanka

Vietnam

0

5

10

15

20

25

30

0 20 40 60 80 100 120 140 ODA/capita

US$

ODA/GDP%

Aid Dependency(US$ per capita and % of GDP, 1998)

National Development Strategy

• National goal: “Industrialization and Modernization” by 2020

• PRSP as a supplementary document to the core documents (i.e., 10-Year Strategy & 5-Year Plan), which embraces a growth-oriented development vision.

National Development Strategy

• PRSP to reinforce (not replace) the existing development strategy, dealing with poverty reduction in a cross-cutting and participatory manner.

PRSP as a Supplementary Document

Existing dev. plan

PRSP Sector plans

Budget

govern

supplement

PRSP as a Primary Document

Existing dev. plan

PRSP

Sector plans,budget, MTEF,

aid procedures

symbolic

govern

Strong Concern for Social Equity

• Gov’t commitment to giving high priority to social equity

• Fairly developed network for social service delivery

• Existing policies & programs targeted at the poor

Infant Mortality Rate (2000)

0

10

20

30

40

50

60

70

80

90

100La

o PD

R

Mya

nmar

Cam

bodi

a

Indo

nesi

a

Chin

a

Phili

ppin

es

Thai

land

Viet

nam

Kore

a

Mal

aysi

a

Taiw

an

Japa

n

Hong

Kon

g

Sing

apor

e

Sources: World Bank, World Development Indicators 2002; For Taiwan, ADB, Key Indicators 2001 .

(per 1,000 live births)

Average of lowincome countriesAverage of middle

income countries

Female Adult Illiteracy Rate (2000)

0

10

20

30

40

50

60

70

80

Lao

PDR

Cam

bodi

a

Chin

a

Indo

nesi

a

Mal

aysi

a

Mya

nmar

Taiw

an

Sing

apor

e

Hong

Kon

g

Viet

nam

Thai

land

Phili

ppin

es

Kore

a

%

Sources: World Bank, World Development Indicators 2002; For Taiw an, ADB, Key Indicators 2001 .

Average of lowincome countries

Average of middleincome countries

Vietnam’s CPRGS

… This is an action plan for realizing economic growth and poverty reduction objectives. The CPRGS paper sees a harmony between economic growth and measures to solve social problems….

quoted from CPRGS “Introduction”by The Socialist Republic of Vietnam, May 2002, pp.2-3.

East Asian Aspiration

Equitable GrowthGoal:

< Vietnam >Industrialization & Modernization

5-Year Plan & 10-Year Strategy

Means:

Growth Policies Social Policies

3. Asian Dynamism as Key Factor

• Development driven by trade & investment• East Asian growth as collective

phenomenon: “Flying Geese Pattern”• Development as catching up (vs.

development as poverty reduction) • Participation in regional/global production

network through int’l division of labor

Share in World Export

02468

1012141618

60s 70s 80s 90s

(%)

Per Capita GNP Growth

0

1

2

3

4

5

6

7

60s 70s 80s 90s

(%)

East Asia

Sub Saharan Africa

Source: Ministry of Economy, Trade and Industry, White Paper on International Trade 2001, p.78.

East Asia

Sub Saharan Africa

Structural Transformation in East Asia

Japan

NIEs

ASEAN4

Latecomers

Latestcomers

Country

Time

Garment Steel Popular TV Video HDTV

1

3 2

1 Japan

Garment SteelPopular

TV Video HDTVCom

petit

iven

ess

Time

Com

petit

iven

ess

Time

Com

petit

iven

ess

2 Garment

JapanNIEs

ASEAN4

LatecomersLatest comers

International Division of Labor3

Garment SteelPopular

TV Video HDTV

JapanNIEs

ASEAN4

LatecomersLatest comers

East Asia Reduced PovertyDespite Currency Crisis

Population in Extreme Poverty (%)

0102030405060

East Asia LatinAmerica

South Asia Sub-SaharanAfrica

19901999

Vietnam’s Aspiration

• Vietnam with typical East Asian aspiration

• Very strong interest in narrowing intra-regional gaps (vs. original ASEAN)

• Also, interested in infrastructure, HRD, trade, FDI attraction

• Narrow “poverty reduction” approach, not enough.

0.0

2.0

4.0

6.0

8.0

10.0

12.0％

Real GDP Growth Poverty

Progress in the Last Decade

Source: Government Statistics Office (GSO), Government of Vietnam.

58

25

37

15

0

10

20

30

40

50

60

70

Below Total Poverty Line Below Food Poverty Line

19931998

%

Source: World Bank, “World Bank and Vietnam,” [http://www.worldbank.or.jp/06group/RC_flame.htm].

Vietnam is a Large FDI Receiver

% of GDP, average 1991-99

5.4

0.8

1

1.1

1.2

1.6

3.2

3.5

3.2

0.9

0 1 2 3 4 5 6

Vietnam (1991-00)Korea, Rep.

BrazilChina

MexicoArgentinaMalaysia

Chile

High Income countriesLow & middle incomecountries

(%)Source: Government of Vietnam and World Bank, SIMA database (cited from Vietnam 2010 Entering the 21st Centruy , Joint Report of World Bank, ADB and UNDP, November 2000.

Per Capita Income (2000)

0

10,000

20,000

30,000

40,000Ja

pan

Hon

gKon

g

Sing

apor

e

Kor

ea

Mal

aysi

a

Thai

land

Phili

ppin

es

Chi

na

Indo

nesi

a

Viet

nam

Lao

PDR

Cam

bodi

a

US$

Source: World Bank, World Development Indicators 2002 .

at Actual Exchange Rate

at PPP

４ . Japan’s Development Cooperation

• Strong interest in the dynamic structure of the real economy

• Since 1992, supporting Vietnam’s three strategic tasks:– Long-term development– Systemic transition to a market economy– Active participation in East Asia’s dynamic

production network

Japan’s Development Cooperation

• Balanced growth with social equity• Infrastructure and policy advice

– Transport & power– Large-scale, policy-oriented programs

• Partnership efforts

Japan's ODA to Vietnam by Priority Area 1991-2001

0 10 20 30 40 50 60

Agriculture

Education and health

Environmental conservation

Human resource andinstitution development

Economic infrastructure intransport and pow er etc.

Unit: number of approved projects

Grant andTechnicalCooperationYen Loan

Note: by fiscal year (April to March) and commitment base.Source: JICA Vietnam Office, JICA Activities and Grant Aid Projects in Vietnam, May 2002. JBIC Website, http://w w w .jbic.go.jp (Economic Cooperatin, ODA Project Data).

Future Challenges

• Concrete growth strategy:– Preparing for global integration: AFTA

& WTO– Enhancing productivity and industrial

competitiveness– Coping with risks and emerging social

problems in the growth process

Future Challenges

• Concern for growth: to be addressed not only in the bilateral context, but also under the multilateral framework

• Japan: to support Vietnam’s balanced growth with equity—through an appropriate mix of grants, loans, and technical cooperation.

The END

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