vietnam gap analysis november 9 2012 · november 9, 2012 strategic planning and analysis division...

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Vietnam Gap Analysis

November 9, 2012

Strategic Planning and Analysis Division

Europe & Eurasia Bureau, USAID

This effort is intended to be an abridged draft analysis of development trends in Vietnam, drawing in

large part on USAID’s Monitoring Country Progress (MCP) system. Accompanying this narrative is a

series of charts, tables, and an appendix focused on methodology. Much of the framework of what is

presented below draws from a larger ongoing effort; namely, the development of a Monitoring Country

Progress in Asia report which in turn will be contributing to the development of an Asia Regional

Development Cooperation Strategy on the part of USAID’s Regional Development Mission for Asia

(RDMA) in Bangkok. As it stands, there is considerable scope for additional focus on data and trends in

Vietnam in macroeconomic performance in particular and to a lesser extent in investing in people (in

health and education trends).

The MCP system is both an empirical and a visual system. At its core are five indices corresponding to

economic reforms, governing justly & democratically, investing in people, macroeconomic performance,

and peace & security. Publically available data from a host of sources including the World Bank, various

United Nations organizations, the IMF, Freedom House, and various annual U.S. government reports are

converted to a 1 to 5 scale in each index, where a 5 represents the best performance worldwide and a 1

represents the worst performance. The appendix elaborates.

Highlights of the findings.

Vietnam’s development profile.

(1) Vietnam’s development profile is distinguished by considerable lagging in democracy and

governance, by Asian standards and by global standards. In contrast, Vietnam’s progress in

economic reforms is Asian average, and its progress in investing in people and in peace &

security is slightly above Asian average (Figure 1). However, Vietnam’s lagging progress in

governing justly & democratically is in line with the levels of democratic reform among the five

Lower Mekong Initiative (LMI) countries, of which Vietnam is one (Figure 2).

(2) On three development dimensions—economic reforms, investing in people, and peace &

security—Vietnam’s profile most closely resembles that of Mongolia and Sri Lanka of the

twenty‐five Asian countries (Figures 3‐5). On governing justly & democratically, Vietnam most

closely resembles China and Cambodia (Figure 5). Table 2 provides the disaggregated scores of

the governing justly and democratic index; and further underscores a similar democracy profile

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particularly be tween China and Vietnam, both lagging the most in free media and political

rights.

(3) Vietnam’s salient gaps within the development dimensions (i.e., looking at the components of

the MCP indices), by Asian standards and/or global standards include media freedom, political

rights, and anti‐corruption efforts in governing justly and democratically; per capita income and

health expenditures in investing in people, energy security in macroeconomic performance, and

the capacity to combat weapons of mass destruction in peace & security (Figures 6 and 7).

(4) Vietnam is well‐advanced in trade liberalization (in economic reforms), in gender equality,

under‐five mortality rates, life expectancy, and literacy rate (in investing in people), in a

competitive export sector, a broad financial sector as evidenced by a large proportion of

domestic credit to GDP, and strong economic growth ( in macroeconomic performance), and in

several peace & security dimensions; namely, counter‐terrorism capacity, security sector

reforms, and conflict mitigation or the vulnerability of the government toward conflict.

Economic reforms.

(5) Trends in the MCP economic reform index show Vietnam making relatively good progress in

economic reforms since 2003, though most the gains have been due to notable progress in

trade liberalization (Figures 8, 10‐12). In fact, since 2007, several economic reform dimensions

have slightly regressed, including the business environment, regulatory quality, and

government effectiveness or the quality and commitment of the government to make economic

policy.

(6) Progress in economic reforms ranges widely among the Lower Mekong Initiative countries with

Thailand well out front, Laos, Burma, and Cambodia lagging considerably, and Vietnam

somewhere in between (Figures 11 and 14).

Governing justly and democratically.

(7) Advances in democracy and governance in Vietnam have been largely stagnant since at least

2000 (Figures 15 and 16). In fact of the five democracy aspects measured in the MCP governing

justly and democratically index, only one component, civil liberties, has advanced in Vietnam

since the early 2000s (Figure 17).

(8) Vietnam ranks roughly in the middle of the Asian countries (12th out of 23 countries for which

data are available) in terms of the magnitude of perceived corruption (Figure 18). However,

most Asian countries fare poorly on this measure by global standards. Vietnam ranks 114 out of

the global sample of 184 countries, and its score of 2.9 out of a possible 10 is much closer to

North Korea’s score of 1 (the country with the highest perceived corruption in the world) than

to New Zealand’s score of 9.5 (the country with the lowest perceived corruption in the world).

Macroeconomic performance.

(9) Vietnam has maintained very high economic growth rates in recent years, and these high rates

are projected to continue into 2013 and 2014 (Figures 19 and 20). Vietnam’s economy has been

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growing at an annual rate since 2008 of around 6%, very similar to what India has experienced

for most of those years (with the exception of 2010 when India’s economy expanded by almost

10%, Figure 20). Vietnam’s economic expansion has been characterized by a steady pace, with

little evidence of being adversely impacted by the global economic recession in 2008‐2009.

(10) Table 9 shows Vietnam with one of the highest MCP macroeconomic performance scores in

Asia, 4th out of 22 countries for which data are available. By this index, the largest

macroeconomic performance gap in Vietnam is energy security, given its relatively high

dependence on energy imports and low energy usage efficiency (Table 10). Vietnam’s

macroeconomic stability (as measured by inflation, external debt, and current account balance)

is below Asian average (Figure 7 and Table 11); its low score attributed largely to relatively high

inflation.

(11) Vietnam’s export sector is performing very well (Figure 7 and Table 12). The sector is relatively

large; the economy quite outward‐oriented. Vietnam’s export share of GDP is 81%; the Asian

average is 64%. Manufactured exports constitute 65% of total exports in Vietnam; the Asian

average is 63%. Vietnam lags some on the magnitude of high‐tech exports; such exports

constitute only 3% of total exports in Vietnam. In China, they constitute 26% and in Thailand,

18%.

Investing in people.

(12) Vietnam’s investing in people score according to the MCP index is slightly above Asian average;

Vietnam ranks 10th out of 21 Asian countries for which data are available (Table 7).

(13) As elsewhere in much of Asia, some basic health trends continue to improve in Vietnam.

Under‐five mortality rates continue to fall (Figures 21 and 22) and life expectancy rates continue

to rise (Figures 23 and 24). Life expectancy in Vietnam is 75 years, notably higher than the Asian

average of 71 years.

(14) Figures 25‐28 highlight some significant disparities within Vietnam, in terms of poverty rates

and education enrollment rates. Poverty rates vary widely between urban and rural areas in

Vietnam: in 2008, poverty in rural areas was around 18%; in urban areas, closer to 3%. Poverty

among the Kinh majority is much lower than poverty among other ethnic groups, less than 15%

vs. 50%, respectively. Poverty across geographic areas ranged from 45% in the Northwest to 3%

in the Southeast in 2008. However, poverty rates fell significantly across Vietnam from 2002 to

2008, nationwide, from by roughly half, from almost 30% in 2002 to 15% in 2008. The most

substantial declines in poverty occurred in the rural areas (Figure 25), and most notably in the

Central Highlands (Figure 26).

(15) Primary enrollment rates are uniformly high (with gross enrollment rates exceeding 100%)

(Figures 27 and 28). This is consistent with a high literacy rate of 93%, well above the Asian

average of 84% (Table 6b). The nation’s lower secondary enrollment rate is around 95%; only

two regions in Vietnam have this enrollment rate below 90%, the Central Highlands and the

Mekong River Delta. Upper secondary enrollment rates are much lower, around 73%

nationwide. The urban‐rural disparity in upper secondary enrollment rates is large; 87% in the

urban areas vs. 70% in the rural areas. Of the geographic regions, the Mekong River Delta lags

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the most, less than 60% enrollment rate. Ethnic groups other than the Kinh/Hoa lag even more

in upper secondary enrollment rates; less than 50%.

(16) Figures 29‐32 were developed for another application, to provide analysis for the Bureau for

Food Security’s Feed the Future Program and towards its efforts to measure food security. The

level of food security in Vietnam, Peru, and Brazil is being considered as a “target” for the

twenty Feed the Future focus countries, i.e., as countries which have been relatively successful

in becoming food secure. The data of Figures 29‐32 provide some support for this

consideration. Compared to standards of the twenty Feed the Future focus countries (which are

included in the charts), Vietnam is characterized by relatively low (and declining ) hunger,

relatively low poverty, and with a relatively significant capacity to address hunger and poverty

through a favorable rural sector enabling environment.

Vietnam Gap Analysis

Europe & Eurasia Bureau

Strategic Planning and Analysis Division

November 2012

[email protected]

Figure 1: The Development Profile of Vietnamvs. Asia

VietnamAsia

1

1.5

2

2.5

3

3.5

4

4.5

5

Economic Reforms Governing Justly andDemocratically

Investing in People Peace and Security

USAID/E&E, Monitoring Country Progress (MCP) Global (http://bit.ly/usaidmcp). Asia refers to 25 countries; they are listed in the appendix. See appendix for construction and sources of the MCP indices.

Figure 2: Development Profile of Vietnam vs. the Lower Mekong Initiative (LMI) Countries

Vietnam

LMI

1

1.5

2

2.5

3

3.5

4

4.5

5

Economic Reforms Governing Justly andDemocratically

Investing in People Peace and Security

USAID/E&E, MCP Global. The Lower Mekong Initiative (LMI) countries are Burma, Cambodia, Laos, Thailand, and Vietnam.

Figure 3: Investing in People and Economic Reforms in Asia in 2011

Investing in People

Economic Reforms

CambodiaLao PDR

Thailand

Vietnam

Brunei

Indonesia

Malaysia

Philippines

Singapore

Bangladesh

China

India

Korea, Rep

Maldives

Mongolia

Micronesia

Nepal

PNG

Samoa

Sri Lanka

Timor‐Leste

ASIA

OECD

SS Africa

1

1.5

2

2.5

3

3.5

4

4.5

5

1 1.5 2 2.5 3 3.5 4 4.5 5

USAID/E&E, MCP Global.

Southeast Asia

South Asia

East Asia

Pacific Islands

Economic Reforms

Figure 4: Peace & Security and Economic Reforms in Asia in 2011

Peace & Security

Burma

Cambodia

Thailand

Vietnam

Indonesia

PhilippinesBangladesh

China

India

Korea, Rep

Mongolia

Sri Lanka ASIA

OECD

SS Africa

1

1.5

2

2.5

3

3.5

4

4.5

5

1 1.5 2 2.5 3 3.5 4 4.5 5


Southeast Asia

South Asia

East Asia

Lao PDR

Cambodia

Burma

Thailand

Vietnam

Brunei

Indonesia

Malaysia

Philippines

Singapore

Bangladesh

China

Hong Kong

India

Korea, Rep

Maldives

Marshall Islands

Mongolia

MicronesiaNepal

PNG SamoaSri Lanka

Timor‐Leste

ASIA

OECD

Sub‐Saharan Africa

1

1.5

2

2.5

3

3.5

4

4.5

5

1 1.5 2 2.5 3 3.5 4 4.5 5

Figure 5: Economic Reforms and Governing Justly & Democratically in Asia in 2011

EconomicReforms

Governing Justly & Democratically

Southeast Asia

South Asia

East Asia

Pacific Islands


Figure 6: Vietnam vs. AsiaEconomic reforms

Investing in people

Governing justly and democratically

USAID/E&E, MCP Global. The blue shaded area represents Vietnam’s progress.

Asia average

Business Environment,

2.8

Regulatory Quality, 2.3

Government Effectiveness,

2.4

Trade Liberalization,

4.5 1

2

3

4

5

Under‐5 Mortality, 4.6 Life

Expectancy, 4.5

Health Expenditure,

1.9

Environ‐mental

Health, 2.3Literacy Rate, 4.5

Education Expenditure,

3.2

Per CapitaIncome, 1.5

Gender Equality, 4.6

1

2

3

4

5

Political Rights, 1.0

Civil Liberties,

2.3

Media Freedom,

1.1Rule of Law, 2.3

Anti‐Corruption,

1.9

1

2

3

4

5

Economic performance Peace and Security

Figure 7: Vietnam vs. Asia


Asia average

Per Capita GDP Growth,

3.9Macrostability,

3.4

FDI, 3.4

Exports, 4.8

Energy Security, 2.0

Uneven Development,

2.9

Environmental Sustainability,

2.7

Domestic Credit, 4.5

1

2

3

4

5

Counter‐terrorism, 4.0

Combating Weapons of

Mass Destruction,

2.0

Stabilization Operations and Security Reform, 4.2Counter‐

narcotics, 2.7

Transnational Crime, 2.3

Conflict Mitigation,

4.0

1

2

3

4

5

Figure 8: Vietnam’s Progress2005 vs. 2011

Economic reforms Governing justly and democratically


Vietnam 2005

Political Rights, 1.0

Civil Liberties,

2.3

Media Freedom,

1.1

Rule of Law, 2.3

Anti‐Corruption,

1.9

1

2

3

4

5

Business Environment,

2.8

Regulatory Quality, 2.3

Government Effectiveness,

2.4

Trade Liberalization,

4.5

1

2

3

4

5

Economic performance


Vietnam 2004‐2005

Per Capita GDP Growth,

3.9

Macrostability, 3.4

FDI, 3.4

Exports, 4.8Energy Security, 2.0

Uneven Development,

2.9

Domestic Credit, 4.5

1

2

3

4

5

Investing in people

Under‐5 Mortality,

4.6

Life Expectancy,

4.5

Health Expenditure,

1.9Literacy Rate, 4.5

Per CapitaIncome, 1.5

Gender Equality, 4.6

1

2

3

4

5

Figure 9: Vietnam’s Progress2004‐2005 vs. 2010‐2011

LMI

Asia

Vietnam

1

1.5

2

2.5

3

3.5

4

4.5

5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Economic Reforms in Asia from 2000‐2011

USAID/E&E, MCP Global..

Figure 10

Vietnam

Thailand

Lao PDR

Cambodia

Burma

1

1.5

2

2.5

3

3.5

4

4.5

5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Economic Reforms in LMI Countries2000‐2011

Figure 11


Economic Reforms in Vietnam from 2002‐2011

Business Environment

Regulatory Quality

Government Effectiveness

Trade

1

1.5

2

2.5

3

3.5

4

4.5

5

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


Figure 12

Business Environment in Asia from 2005‐2011

USAID/E&E, MCP Global. Drawn from the World Bank, Doing Business.

LMI

Asia

Vietnam

1

1.5

2

2.5

3

3.5

4

4.5

5

2005 2006 2007 2008 2009 2010 2011

Figure 13

Business Environment in LMI countries from 2005‐2011

USAID/E&E, MCP Global. Drawn from the World Bank, Doing Business.

LMI

Vietnam

Cambodia

Thailand

Lao PDR

1

1.5

2

2.5

3

3.5

4

4.5

5

2005 2006 2007 2008 2009 2010 2011

Figure 14

LMI

Asia

Vietnam

1

1.5

2

2.5

3

3.5

4

4.5

5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Governing Justly & Democratically in Asia from 2000‐2011


Figure 15

Vietnam

Thailand

Lao PDR

Cambodia

Burma1

1.5

2

2.5

3

3.5

4

4.5

5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Governing Justly & Democratically in LMI Countries from 2000‐2011

Figure 16


Governing Justly & Democratically in Vietnam from 2000‐2011


Political Rights

Civil Liberties

Media Freedom

Rule of Law

Corruption

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Figure 17

Transparency International, Corruption Perceptions Index, 2011. Scores are based from 0 (highly corrupt) to 10 (very clean).

Corruption Perceptions IndexFigure 18

SingaporeHong KongSouth KoreaBruneiMalaysiaSamoa

ChinaThailandSri LankaIndiaIndonesiaVietnam

MongoliaBangladeshPhilippinesMaldivesTimor LesteLaos

NepalPapua New GuineaCambodiaBurmaNorth Korea

0 1 2 3 4 5 6 7 8 9 10

Vietnam

North Korea

Singapore

Brunei

New Zealand

Taiwan

Tanzania

Iraq

Thailand

Lao

Cambodia Vietnam

Burma

‐4

‐2

0

2

4

6

8

10

2008 2009 2010 2011 2012 2013 2017

Real GDP Growth

% change

IMF, World Economic Outlook (October 2012).

Figure 19

China

India

Vietnam

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013 2017

Real GDP Growth

% change

IMF, World Economic Outlook (October 2012).

Figure 20

Figure 21

Under‐5 Mortality

LMI

ASEAN

Asia

Vietnam

1

11

21

31

41

51

61

71

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

World Bank, World Development Indicators (2012).

Per 1000 live births

Figure 22

Under‐5 Mortality

Vietnam

Thailand

Lao PDR

Cambodia

Burma

0

10

20

30

40

50

60

70

80

90

100

110

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


Per 1000 live births

Figure 23

Life Expectancy


LMI

ASEAN

Asia

Vietnam

62

64

66

68

70

72

74

76

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

years

Figure 24

Life Expectancy


Vietnam

Thailand

Lao PDR

Cambodia

56

58

60

62

64

66

68

70

72

74

76

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

years

Poverty Rates in Vietnam

% of population

UNDP, Social Services for Human Development: Viet Nam Human Development Report 2011 (November 2011).

Figure 25

0

10

20

30

40

50

60

70

Total Urban Rural Kinh majority Other ethnic groups

2002

2004

2006

2008

Poverty Rates by Geographical Region in Vietnam

% of population


Figure 26

0

10

20

30

40

50

60

70

80

Total Northwest Northeast CentralHighlands

NorthCentralCoast

SouthCentralCoast

MekongRiver Delta

Red RiverDelta

Southeast

2002

2004

2006

2008

Gross Enrollment Ratios in Vietnam


Figure 27

Students/School‐aged children

0

10

20

30

40

50

60

70

80

90

100

110

Whole country Urban Rural Kinh/Hoa Other ethnicgroups

Primary

Lower secondary

Upper secondary

Gross Enrollment Ratios by Geographical Region in Vietnam


Figure 28

Students/School‐aged children

0

10

20

30

40

50

60

70

80

90

100

110

Wholecountry

NorthernUplands

CentralHighlands

Central Area& Central

Coastal Area

MekongRiver Delta

Red RiverDelta

Southeast

Primary

Lower secondary

Upper secondary

Figure 29: Global Hunger Index vs. Per Capita Income

Income Per Capita

Global Hunger Index

Morocco Indonesia

Yemen

IndiaMongolia

Malaysia

Thailand

China

VietnamCambodia

Bangladesh

0

2000

4000

6000

8000

10000

12000

0 5 10 15 20 25 30

International Food Policy Research (IFPRI), 2011 Global Hunger Index (October 2011). The Global Hunger Index combines the proportion of the population that is undernourished , the prevalence of underweight in children under five , and the proportion of children dying before the age of five.

Bangladesh

Cambodia

Ethiopia

Ghana

Guatemala

Haiti

Honduras

Kenya

Liberia

Malawi

Mozambique

MaliNepal

Nicaragua

Rwanda

Senegal

Tajikistan

Tanzania

Uganda

Zambia

Vietnam

Peru

Nigeria

India

Brazil5

10

15

20

25

30

0102030405060708090100

Hunger

Percentage of Population living on less than $1.25 /day

International Food Policy Research (IFPRI), 2011 Global Hunger Index (October 2011), and World Bank, PovcalNet (2012).

Figure 30: Hunger and Poverty in the FTF Focus Countries

IV. Higher Hunger;Higher Poverty

Lower Hunger

Lower Poverty

II. Lower Hunger;Higher Poverty

III. Higher Hunger;Lower Poverty

I. Lower Hunger;Lower Poverty

HondurasGhana

Nicaragua

SenegalGuatemala

UgandaTajikistan

Malawi

Kenya MaliNepalCambodia

TanzaniaRwanda

LiberiaMozambique

Zambia

Bangladesh

Haiti

Ethiopia

Vietnam

Peru

Nigeria

India

Brazil5

10

15

20

25

30

2.5 3 3.5 4 4.5 5

Hunger

Rural Sector Enabling Environment

International Fund for Agricultural Development (IFAD), Rural Sector Performance Assessment (2012?), and IFPRI, 2011 Global Hunger Index (October 2011).

Figure 31: Hunger and the Rural Sector Enabling Environment

Lower Hunger

Better Enabling Environment

I. Lower Hunger;Better Environment

IV. Higher Hunger;Poorer Environment

III. Higher Hunger;Better Environment

II. Lower Hunger;Poorer Environment

Peru

Nigeria

Vietnam

Brazil

India

5

10

15

20

25

30

35

40

45

1990 1996 2001 2011

Figure 32: Reduction in Hunger among Select Countries

IFPRI, 2011 Global Hunger Index (October 2011).

Lower Hunger

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