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Assessments and recommendations for Vietnam human development

(LLCT) - From a nation with stagnant economy in the early 1980s, Vietnam today has become a lower-middle-income country with many attainments in human development. However, there are still limitations and weaknesses, requiring the Government to seek appropriate solutions and policies to promote human development in Vietnam in the coming period.

Health festival for the elderly in Nam Tu Liem district, Hanoi

Keywords: Human development, Vietnam.

1. Key achievements of human development in Vietnam

The very first achievement is the increase in the Human Development Index (HDI)

Vietnam’s HDI has increased significantly after more than 30 years of renovation, from 0.439 (1990) to 0.559 (1995), 0.687 (2000), 0.714 (2005), 0.718 (2006), 0.725 (2007) and 0.752 (2009). Since 2010, the UNDP’s calculation method has been modified as follows: (1) Knowledge Index: replacing literacy rate by the mean and expected years of schooling; (2) Income Index: replacing the GDP per capita by GNI per capita. According to this new calculation, the HDI of most countries, including Vietnam, has decreased.

Even though, Vietnam’s HDI is increasing. The average growth rate of Vietnam in the period of 1990 - 2018 is 1.36%/year, higher than that of some countries in the region, such as Thailand (1.03%), Indonesia (1.07%), the Philippines (0.67%), and Malaysia (0.8%)(1).

Vietnam’s HDI ranking is also on the rise. In 2010, Vietnam ranked 128/187 globally and 33/47 among countries with medium HDI. In 2014, Vietnam’s ranking increased to 116/188 globally and 10/38 among countries with medium HDI. By 2018, Vietnam ranked 2nd out of 37 countries in the group of medium HDI and 118th out of 189 countries in the world(2).

Vietnam only needs an additional 0.007 value points to move forward to the group of High HDI and rank among the top 40 developing countries that have made better progress than expected in human development.

Second, the HDI’s component score of Vietnam is also increasing relatively fast

Health Index: Life expectancy increased from 67.6 years old in 1980 to 75.3 years old in 2018. The number of hospital beds increased from 192.3 thousand in 1990 to 308.4 thousand beds in 2018, corresponding with an increasing number of medical doctors  - from 31 thousand to 84.8 thousand(3).

Income Index: GNI per capita increased from 850 USD in 1990 to 6,220 USD in 2018 (PPP calculation). Knowledge Index: Expected years of schooling increased from 7.8 years (1990) to 12.7 years (2018) and the mean years of schooling increased from 4.0 years (1990) to 8.2 years (2018)(4).

The third achievement is the elevation in the number of localities with remarkably-high, high, and medium-high HDI, and reduction in the number of localities with medium, medium-low, and low HDI

In 1999, only Ba Ria - Vung Tau was in the group of remarkably-high HDI (HDI> 0.80). By 2012, there were also Ho Chi Minh City and Da Nang. In 2004, there were only two cities in the group of high HDI (0.75 <HDI <0.80) which were Ho Chi Minh City and Da Nang. By 2012, there were 12 provinces and cities in the group.

The increase in the number of provinces and cities in the group of medium-high HDI (0.70 <HDI <0.75) is also significant. In 1999, there were only 4 provinces and cities on the list. The number grew to 7 in 2004 and 35 provinces and cities in 2012. Therefore, by 2012, Vietnam had 50/63 provinces and cities in the group with medium-high HDI or higher.

The number of provinces in the group of low HDI (HDI <0.50), medium-low (0.50 <HDI <0.60) and medium group (0.60 <HDI <0.70) has declined rapidly. In 2004, there were 53 provinces and cities in the above groups. By 2012, there were no provinces in the low HDI, 1 province in the medium-low HDI group, and 11 provinces in the medium HDI group (which consisted of 47 provinces in 2004)(5).

Fourth, there has been an increase in the proportion of the population in the high and middle-income groups, while reducing the proportion of  poverty and near-poverty

In 2004, the high-income group accounted for only 3.4% of the population, then increased to 7.0% by 2012; meanwhile, the upper-middle-class increased from 2.7% in 2004 to 6.7% in 2012; the lower-middle-class increased quickly from 28.4% in 2004 to 47.8% in 2012. The proportion of the poverty and near-poverty population gradually declined, from 26.7% and 38.8% in 2004 to 12.4% and 26.1%, respectively, in 2012(6).

In 2018, there were 13% of the Vietnamese population in the middle-income class, which has expanded rapidly by more than 20% from 2010 to 2017. In the period of 2014 - 2018, an average of 1.5 million Vietnamese joined the global middle class each year(7).

In addition, the proportion of poverty declined sharply from 58% (1993) to 28.9% (2002) and 5.8% (2016). The rate of multidimensional poverty households also decreased from 9.2% (2016) to 7.8% (2017) and 6.8% (2018),  and is estimated to be about 3.73 - 4.23% in the year 2019.

Fifth, the gender development index has experienced great progress

According to the UNDP Human Development Report 2019, Vietnam’s Gender Inequality Index is 0.314, ranking 68/189 globally. Compared to other countries in the ASEAN region, Vietnam is only behind Singapore (with corresponding figures of 0.065 and 11/189) and Malaysia (0.274; 58/189), above Thailand (0.377; 84/189); Philippines (0.425; 98/189); Indonesia (0.451; 103/189); Laos (0.463; 110/189) and Cambodia (0.474; 114/189)(8).

The share of female seats in parliament has increased continuously from 17.7% in the tenure of 1987 - 1992 to 18.84% in 1992 - 1997, to 26.2% in 1997 - 2002, and to 27.3% in 2002 - 2007. In the tenure of 2007 - 2011, the proportion decreased slightly to 25.8% (ranking 31st in the world); this number in 2011 - 2016 tenure was 24.4% (the second highest regionally and 43rd globally). The proportion of female members in the People’s Council at the municipal level was 25.2%, at the district level was 24.6%, and at the commune level was 21.7%(9).

In 2018, the proportion of women in the National Assembly reached 26.7%, while that of Thailand was 5.3%; Malaysia 15.8%; Indonesia 19.8%, Cambodia 19.3%, and Myanmar 10.2% respectively(10).

Sixth, positive outcomes have been evident in social security

After more than 3 decades of renovation, social security has accomplished impressive results. In 2017, the number of social insurance (SC) participants was 13.82 million, that of health insurance (HI) participants was 81.19 million, and that of unemployment insurance (UI) participants was 11.54 million. The number of beneficiaries in SI, HI, and UI is also escalating. In 2010, the number of people enjoying monthly social insurance was 2.4 million; by 2017 it had grown to 3.03 million. The number of people benefiting from one-time social insurance increased from 647.7 thousand in 2010 to 863.7 thousand in 2017. The number of people receiving medical examination and treatment under health insurance in 2010 was 106 million, increasing to 169.9 million in 2017. The number of people entitled to unemployment insurance benefits increased from 157 thousand in 2010 to 706.5 thousand in 2017(11). Furthermore, the Vietnam Social Security also provides a monthly allowance for hundreds of thousands of people with disabilities who cannot work; hundreds of thousands of other vulnerable people, such as lonely elderly ones, orphans, disadvantaged children, and people with HIV, are subsidized with cash and social care support. Poverty and ethnic minority households, including their children, receive monthly allowances, tuition waivers, production support, and vocational training.

2. Issues in human development in Vietnam

- Vietnam’s achievements in human development have been slowing down in recent years

Vietnam’s HDI index growth rate has been decreasing in the period of 1990 - 2018 (1990 - 2000: 1.99% p.a., 2000 - 2010: 1.23% p.a., 2010 - 2018: 0.74% p.a.), with an average growth of 1.36% p.a., lower than that of some countries in the region in the same period such as Laos (1.49% p.a.), Cambodia (1.49% p.a.), Myanmar (1.85% p.a.), and China (1.48% p.a.)(12).

In the ASEAN region, Vietnam’s HDI ranked 7/10 in 1995, 6/10 in 2000 and 2003, then remained at 7/10 in the period from 2005 to 2018 (just above Laos, Cambodia, Myanmar and East Timor).

- Slower improvement has been observed in HDI ranking than that of some countries in the region

Since 1980, though Vietnam’s HDI has experienced certain improvements, the ranking has not changed significantly. In 1980, Vietnam’s HDI was slightly higher than China and equivalent to Thailand, but in 2014, China was categorized into the group of high HDI countries (0.727, ranking 90/188), as well as Thailand (0.726, ranking 93/188); while Vietnam was still in the group of medium HDI (0.676, ranking 116/188)(13).

In 2018, while Thailand rose to the top of high HDI group (0.765, ranking 77/198) and China’s HDI reached 0.758 with the ranking of 85/189; Vietnam was only at the top of the medium HDI category (0.693, ranked 118/189, 41, lower than Thailand and 33 ranks lower than China)(14).

- Vietnam’s education is progressing but still behind some countries in the region.

The mean years of schooling for Vietnamese people aged 15 and over has been improving gradually, from 3 years (in 1960) to 4.6 years (in 1980), 6.4 years (in 2010), and 8.2 years (in 2018). However, compared to some other countries in the region, Vietnam’s achievements are still much lower. For example, in 1960, Malaysia was 2.8 years and in 2018 it was 10.2 years. The corresponding figures for the Philippines are 4.7 years and 9.4 years; Singapore is 3.7 years and 11.5 years; Korea is 4.3 years and 12.2 years(15).

- There has been unsustainable achievement in poverty reduction

Even though there are certain achievements, the results of alleviating poverty in Vietnam are quite unsustainable. The average rate of re-poor households over the total number of households that escaped poverty in 2016 and 2017 was 5.17% p.a. (specifically, the figure in the Northwest was 26.86%); Meanwhile, the rate of newly arising poor households over total households that escaped poverty was as high as 22.98% p.a. Particularly in 2017, the newly arising poor household rate was high, mainly in ethnic minority and mountainous areas such as the Northeast mountainous region at 24.67%, the Northwest mountainous region at 39.21%, and the Central Highlands at 31.74%. Some provinces with a very high annual rate of new poor households were Ha Giang 28.25%, Cao Bang 25.44%, Bac Kan 59%, Son La 52.31%, Đien Bien 41.5%, Đak Nong 44%, and Kon Tum 41% (The number of newly poor households nationwide equals  23% of households that escaped poverty)(16).

As of March 2018, there were 8/64 districts under the 30a program that escaped poverty;  in addition, 14/30 districts under the 30a program eliminated economically difficult situations, but there were 29 new districts added to the list of poor districts for the period of 2018 – 2020. In particular, among 12 provinces which have markedly increased re-poverty rates (from 0.03% or more), there were provinces that have favorable socio-economic development conditions such as Vinh Phuc, Khanh Hoa, Kien Giang; the number of re-poor households equals about 1/20 of the number of households that escaped poverty; the number of newly arising poor households equals about a quarter of the number of households that escaped poverty; Provinces in areas affected by natural disasters and floods have a very high annual rate of newly poor households(17).

3. Policy recommendations

Based on the above analysis, it is recommended that the Government pay attention to the following three policy categories to promote human development and gradually narrow the human development gap between Vietnam and advanced countries in the region and the world:

First, policies to maintain macroeconomic stability, promote innovation in the economic growth model, and encourage creativity. These policies are able to promote the capacity of all people and create opportunities for them to improve productivity and income. These policies not only promote economic growth and increase GNI per capita (an HDI component) but also facilitate the other two components of the HDI which are education and health.

Second, policies to improve quality and extend access to pre-primary and higher education, as well as vocational training. Improving quality and expanding health services and education are key factors of inclusive growth and transition to a prosperous economy. These policies focus on building human capacity and providing opportunities for people to reach their full potential.

Third, policies towards a more comprehensive, inclusive, and fairer social security system. These policies will not only provide citizens with access to job opportunities, but also contribute to economic growth and benefit more individuals from such growth, thereby reducing poverty sustainably. Under the present conditions, the Government needs to enhance investment in social services and social security to ensure fair opportunities in both quality and quantity.

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Endnotes:

(1), (4), (8), (10), (12), (14) Human Development Reports 2019, UNDP, p.304-307; 301; 316, 317, 318, 319; 316, 317, 318, 319; 304-307; 304-307.

(2) Summary of Human Development Reports 2011, UNDP, p.17,18; Overview of Human Development Reports 2015, UNDP, p.31,32 and Human Development Reports 2019, UNDP, p. 301,302,303.

(3) General Statistics Office, http://www.gso.gov.vn and Statistical Yearbook of Vietnam 2018.

(5), (6) Vietnam Human Development Report 2015 on Inclusive Growth, Social Sciences Publishing House, 2016, p.35, 50.

(7) World Bank: “The middle-class accounts for 13% of Vietnam population”, https://nhipcaudautu.vn.

(9) Gender equality through statistics, http://baochinhphu.vn.

(11) Statistical Yearbook of Vietnam 2018.

(13) Human development in Vietnam is slowing down and failing back, http://dantri.com.vn.

(15) Data from Barro – Lee Educational Attainment Dataset (Phan and Coxhead 2013) and Human Development Reports 2019, UNDP, p.301,302,303.

(16) “Poverty reduction is not yet sustainable”, https://giaoducthoidai.vn.

(17) “Unsustainable poverty reduction”, http://daidoanket.vn

Assoc Prof., Dr. Nguyen Thi Thom

Ho Chi Minh National Academy of Politics

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