1. International Human Development Consultant,
Identifying a Theme for a Next National Human Development Report of Vietnam
Arkadi Toritsyn, Ph.D.
International Human Development Consultant,
UNDP Vietnam

2. Purpose of the Presentation
Present three potential themes for NHDR-V. The themes include:
Growth that Works for All: Investing in Equal Opportunities
Enhancing Voices and Choices for a Prosperous Future for All
Green growth for human development in Vietnam

3. Process of Concept Notes preparation
Strong commitment of VASS management.
Participatory approach and extensive discussions.
Identification of topics that reflect Government priorities.

4. Process of NHDRs preparation
Participatory – will involve as many stakeholders as possible
High quality – multiple quality control tools will be in place
Findings and recommendations will be broadly disseminated and target diverse audiences
Action –oriented as the ultimate goal is to change institutions, policies, programs, mindsets and behaviours to ensure human development

5. Theme 1: Growth that Works for All: Investing in Equal Opportunities
Economic growth slows down and inequalities increase in Vietnam, which in turn exacerbate structural challenges and affect the pattern and pace of growth and human development.
Income inequalities are 'the biggest global risk: it undermines growth by breaking down the tissues of society'.
Income inequalities are compounded by inequalities in opportunities, in particular inequalities in access to (quality) education and health and productive employment.
Top priority of the Government of Vietnam is to seek a model for sustaining growth in the next decade while ensuring social equality and environment protection.
The Gini coefficient has risen from 0.39 to 0.42 – equivalent to a rise of about 5% between 2004 and This is comparable to Thailand and Indonesia, lower than in China and the Philippines, and higher than in Cambodia, Laos and India

6. Income inequality rose modestly 2004 - 10
This simplified growth incidence curve shows that income growth was higher at the top end of the income distribution than at the bottom end. However, what is interesting is that while the bottom three deciles are clearly suffering from lower growth, growth among those in the top half of the income distribution is pretty similar.
The income of individuals in the top 10% or at the median of the distribution has risen relative to those at the bottom – in 2004, those living in households at the top 10% of the distribution earned 5 and a half times per capita than those at the bottom 10% of the distribution. By 2010, this had risen to 6 and a half times per capita.
Source: World Bank.
From: World Bank, ‘Well Begun, Not Yet Done: Vietnam’s Remarkable Progress on Poverty Reduction and the Emerging Challenges’, 2012.

7. Poverty Reduction is slowing
Economic growth and poverty reduction are slowing
Remaining poor harder to reach, more heterogeneous, less responsive to economic growth.
While urban poverty rates are low, urban residents struggle to cope with rising cost of living, many are forced to work in informal sector without adequate social protection or employment benefits. Migrants remain particularly vulnerable.
Vulnerability to poverty remains high due to climatic shocks, health shocks, rising cost of living, job losses, etc.
Recently, however, the rate of economic growth has started to slow, partly due to external factors but also as a result of persistent macroeconomic instability caused primarily by structural weaknesses. GDP growth in constant prices averaged 7.6 percent between 1993 and 2008, but just 6 percent over the last three years, including 5.03 percent in Inflation averaged 3.7 percent from 1993 to 2006, but 13.8 percent since 2007.
At the same time the rate of poverty reduction is slowing. Poverty is becoming more entrenched and concentrated among ethnic minorities, in upland regions of Vietnam, including the North East and North West Mountains, and parts of the Central Highlands.
Poverty continues to be predominately a rural phenomenon: 91 percent of the poor live in rural areas (similar to 1998), and many are farmers who lack education and skills
Although income poverty rates are low in urban areas, the face of poverty and sources of vulnerability in urban areas are different to those in rural areas. Many urban residents struggle to cope with the rising cost of living and many are forced to work in the informal sector without adequate social protection or employment benefits. Migrants remain particularly vulnerable.
Vulnerability to poverty remains high. While many Vietnamese households have risen out of poverty, many have incomes just above the poverty line and remain vulnerable to falling back. Many remain exposed to weather shocks, health shocks, and rising cost of living, job losses and other income shocks without adequate protection.

8. Why has the theme been chosen?
All groups benefited from economic growth, but the degree to which they benefited and participated in this process varied.
Need to examine linkages between inclusiveness and growth.
Task to explore specific institutional and policy changes that can potentially help Vietnam to overcome current economic stagnation and rising multidimensional inequalities.

9. Core questions to be addressed under the Theme 1
Is the Vietnam growth model sufficiently inclusive?
If the model is not sufficiently inclusive and Human Development focused, what is the impact of this “limited inclusiveness” on the patterns of economic growth and macroeconomic stability?
What would be the impacts of adopting a more inclusive growth model (e.g., reduced inequality, improved human development outcomes, and higher and sustainable growth) in Vietnam?
What should be the inclusive economic growth model for Vietnam that will support sustainable broad based economic growth and human development?

10. Inclusive Growth and Human Development: Linkages
The literature on inclusive growth is abundant, however there is no consensus on its definition. Core elements of the Inclusive Growth concept include:
Inclusive growth refers both to the pace as well as the pattern of growth, which are interlinked and need to be addressed together.
Inclusive growth implies participation and benefit sharing. Participation without benefit sharing will make growth unjust and sharing benefits without participation will make it a welfare outcome.
Its focus is on productive employment rather than direct income re-distribution as a means of income for disadvantaged.
Economic opportunities should be equally accessible irrespective of asset ownership, income, gender, religion, disability, ethnicity and geography.
The concept should also include other dimensions than income.

11. Growth is inclusive when…
It is broad-based and takes place in sectors where bulk of poor work (e.g., agriculture, informal sector)
It is regionally balanced and focuses specially on relatively poorer areas
Focuses on investments in human capital (health and education), ensuring universal access to quality services
Focuses on productive employment creation
Uses social protection as a counter-cyclical and shock reducing policy instrument

12. What drives these inequalities?
Understanding the sources of inequality is key to design policy responses. They include:
Associated with growth processes and changes in return to assets such as education and productive capital
Inefficient public investments
Insufficient investment in social protection
Rising out-of-pocket costs for basic services, particularly health are a growing concern.
Access to quality basic services often depends on ability to pay
Understanding the drivers of inequality is important – here only a few are listed:
The rise in absolute inequality (9.2 times higher for the richest quintile vs the poorest) is partly a reflection of growth processes which have altered the relative return to assets such as education and productive capital in the economy.
Inefficient public investments – which links to the current discussion about reform priorities in Vietnam.
Inefficient public investments are also an important driver of inequalities – focusing on capital-intensive development promoted by artificially cheap capital creates relatively few jobs with low value addition dampening domestic wages and consumption.
Affordability and quality of social services has become a growing concern.
e.g. for health: According to recent data (2008), out-of pocket payments are responsible for an increase in the poverty rate
equivalent to 10 percent when using the US$2.00 a day measure and 27 percent when using the
US$1.25 a day measure. Also, out-of-pocket payments increase the depth of poverty (the poverty gap)
by as much as 15 percent and 24 percent at the US$2.00 and US$1.25 poverty lines respectively. The
incomplete coverage of formal social health insurance is likely one factor behind this lack of financial
protection; the social health insurance scheme covered around half the population in 2008.
(World Bank, Health Equity and Financial Protection Report - Vietnam, 2012)
- Access to quality social services, particularly health and education (but not limited to) increasingly depends on the ability to pay. This includes formal and informal payments (NHDR, 2011).

13. Working outline Human Development Outcomes in Vietnam
Why should we be concerned with inclusiveness of growth?
How inclusive has Vietnam's growth trajectory been?
What are the constraints to growth? How are inequalities affecting the pattern and pace of growth?
Why is Vietnam’s growth trajectory becoming less inclusive?
Towards A More Inclusive Growth Path
Given a wide variety of dimensions of inequality, the chapter will introduce specific indicators for measuring inclusiveness of growth in Vietnam. Tentatively the analysis will explore a number of dimensions of inequality and their linkages with growth:
income;
opportunity in terms of access to markets, resources, including regulatory environment for businesses and individuals redress mechanisms;
access to markets, capital and other resources (including land);
productive employment opportunities;
access to quality public services and social safety nets;
access to information;
voice and participation.

14. Theme 2: Enhancing Voices and Choices for a Prosperous Future for All
Economic growth is fundamentally important for human development, but it does not automatically result in decreased inequalities and human development of all.
Rising inequalities are among the current top concerns in Vietnam
Different degrees of participation in the growth process result in different human development opportunities.
The people participation is affected by the structural barriers in the economic, social, environmental and political domains.

15. Why has the theme been chosen?
High levels of human development cannot be achieved when some groups and individuals are vulnerable and excluded and when some groups face barriers to their participation in economic, social, cultural, and political life.
Identify vulnerable groups.
Identify factors contributing to vulnerabilities.
Inform development of relevant policies and institutional changes that help people take advantages of opportunities and participate, shape and ultimately benefit from public policies.

16. Poverty Poverty in 2010 GSO-WB Methodology Official Poverty Rate (%)
Extreme Poverty Rate (%)
All Vietnam
20.7
8.0
14.2
Urban
6.0
1.5
6.9
Rural
27.0
10.7
17.4
Red River Delta
11.4
2.8
8.4
East Northern Mountains
37.7
17.9
24.2
West Northern Mountains
60.1
36.5
39.4
North Central Coast
28.4
9.7
24.0
South Central Coast
18.1
5.9
16.9
Central Highlands
32.8
17.0
22.2
Southeast
8.6
3.1
3.4
Mekong Delta
18.7
4.8
12.6
Ethnic Minorities
66.3
37.4
52.0
Explanations:
2010 GSO-WB poverty line is VND 653,000 per person/month (Jan 2010 VND): USD (2005 PPP)
‘Extreme’ poverty line is VND 435,000 per person/month (Jan 010 VND) USD (2005 PPP)
Compared to official estimates: rural poverty higher using GSO-WB, extreme poverty concentrated in ethnic minority regions
From: World Bank, ‘Well Begun, Not Yet Done: Vietnam’s Remarkable Progress on Poverty Reduction and the Emerging Challenges’, 2012.

17. Poor still depend on agriculture
The poor still depend on agriculture as their primary source of income
- Crop incomes average VND million per household across the income distribution (rice cultivation required in many regions, plays an important insurance role)
Agriculture wages are important only for poor households; the better off have diversified into off-farm activities
- This also provides some explanation for the large gap between Kinh and non-Kinh. Livelihoods of ethnic minorities depend almost exclusively on agriculture and forestry. The livelihoods of Kinh poor are more diversified; they have low-skill, low-paid jobs in rural areas to supplement farm income.
Source: World Bank, 2012
From: World Bank, ‘Well Begun, Not Yet Done: Vietnam’s Remarkable Progress on Poverty Reduction and the Emerging Challenges’, 2012.

18. Core questions to be addressed under the Theme 2
Who are those 'beneath the averages'? Why a broader human development model should be adopted to identify those who are vulnerable and excluded?
How do those 'beneath the averages' experience inequality? What are the key characteristics and manifestations of inequality from human development perspective?
What are the institutional, policy, attitudinal and other drivers of poverty and inequality in Vietnam? Are they different across different social groups, households, regions and communities?
Do the current policies and programs addressing poverty and inequality work?
What institutional, policy and other changes are needed to ensure that growth benefits vulnerable groups, reduce poverty and inequality? What should be done to ensure that those 'beneath the averages' are actively included into the development process?

19. Human Development and Social Inclusion
Human development which is seen as ‘the expansion of people’s freedoms to live long, healthy and creative lives; to advance other goals they have reason to value; and to engage actively in shaping development equitably and sustainably on a shared planet. People are both the beneficiaries and the drivers of human development, as individuals and in groups’.
It does not deal only with national incomes but focuses rather on creating an environment in which people can develop their full potential and lead productive, creative lives in accord with their needs and interests.
HD approach will demonstrate that income-based measures of poverty are insufficient for capturing the depth and breadth of the deprivations in Vietnam today.

20. Identifying vulnerabilities and factors contributing to them
The NHDR team will identify those groups that are 'beneath the averages‘. Such dimensions as income levels, employment, access to education, health and social services, climate change, levels of participation in decision making and governance, urban-rural differences will be explored.
The root causes of vulnerability and inequality lie in failures in policies and institutions. The political, economic and social processes that lead to inequalities will be examined.

21. Working Outline
Human Development in Vietnam: What is Hiding Behind the Averages?
What Are the Measures of Inequality and Vulnerability?
Vulnerable Groups: Who Are They and Why They Should Be Included into the Development Process?
What are the Barriers to Reduction of Inequality in Vietnam?
What Institutional and Policy Changes are Needed to Ensure that HD Benefits All and that Everybody Contributed to Development?

22. Theme 3: Green growth for human development in Vietnam
Vietnam is facing a wide range of environmental challenges, including pollution and rapidly rising greenhouse gas emissions from power generation and energy consumption.
Climate-related shocks and disasters caused losses of an estimated 1-1.5% of Vietnam GDP annually over the past two decades.
The acceleration of industrialization and urbanization will continue to have negative effects on natural resources and environmental quality, unless critical policies are reformed and practices are changed.

23. Why has the theme been chosen?
Vietnam agreed in 2012 on the Green Growth Strategy (GGS) for and vision to 2050, which is building on the national Climate Change Strategy (2011) and the Strategic Orientation for Sustainable Development (2004), which is also known as the Viet Nam Agenda21.
The NHDR will introduce a concept of Green Growth and demonstrate that its adoption should help Vietnam in dealing with some of its main development challenges, including pollution and rapidly rising greenhouse gas emissions from power generation and energy consumption, as well as inefficiencies in such sectors as manufacturing and transport.

24. Core questions to be addressed under the Theme 3
How do the environmental changes affect HD in Vietnam?
How people’s choices do and can change the environment? What is the concept of Green Growth and what does mean for realities of Vietnam?
What would be the impacts of adopting a Green Growth model for Vietnam in terms of sustainable human development and in particular its impact on the poor and most vulnerable groups? Can economic growth be sustained and environmental aspects addressed at the same time?
What are the main institutional and policy roadblocks to adopting a Green Growth model for Vietnam?
What institutional and policy reforms and changes are needed to implement a Green Growth model in Vietnam?

25. Human Development and Green Growth
The green growth approach seeks to harmonize economic growth with environmental sustainability, while improving the eco‐efficiency of economic growth and enhancing the synergies between environment and economy. Core elements of definitions of green growth:
environmentally sustainable economic progress
growth that is efficient in its use of natural resources, clean in that it minimizes pollution and environmental impacts
linked with other fundamental development issues, including economic development, equity, social development and human security

26. Environment and Development
Promoting human development requires addressing sustainability and this can and should be done in ways that are equitable and empowering.
Environmental degradation intensifies inequality through adverse impacts on already disadvantaged people while inequalities in human development amplify environmental degradation.

27. Some specific areas
Preventing the impacts of climatic stresses and disasters, especially on rural livelihoods
Strengthening natural resource management including for example forest protection and regeneration
Fiscal policies such as indirect subsidies to fossil fuels and the limited scope of environmental taxes
Energy production and energy use; land management

28. Working outline
Human Development Outcomes in Vietnam: Sustainability Perspective
Sustainable Human Development and Green Growth: Two Complimentary Concepts
Benefits of Green Growth for Vietnam
Institutional and policy roadblocks to adopting a Green Growth model for Vietnam
What are the constraints to growth? How are inequalities affecting the pattern and pace of growth? Recommendations.

29. Questions and suggestions: artoritsyn@rogers.com
Thank you
Questions and suggestions: