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Diversifying PRSP
The Vietnamese Model for
Growth-Oriented Poverty Reduction
September 1, 2002
Izumi Ohno
National Graduate Institute for Policy Studies
Background
• Ongoing global poverty reduction
partnership
• Poverty Reduction Strategy Paper
(PRSP)
– Eligibility for Enhanced HIPC Initiative,
IDA/IMF financial support
– Linkage with country assistance strategies
– The means to achieve UN Millennium
Development Goals (MDGs)
Japan and PRSP
• Agree on basic principles of PRSP
(e.g., ownership, partnership); but
• Suggested areas for its enhancement:
– Incorporating country diversity in the
current approach
– Providing strategic alternatives and
options for institutional arrangements,
etc.
Agenda
1. PRSP Overview
2. Country Types and Appropriate
Responses
3. Vietnam’s PRSP Experience:
– Strong ownership: built on the existing
development vision
– Growth orientation: Asian Dynamism
as key factor
1. PRSP Country Status
• 61 countries engaged in PRSP process
[as of Aug. 2002]
– 18 countries completed Full-PRSPs
o/w: 12 Africa, 4 LAC
o/w: 15 linked to “Enhanced HIPC Initiative”
• IDA/IMF comprehensive review
– Joint Development Committee (April 2002)
PRPS Countries by Progress
No. of countries
Africa (35)
East Asia (6)
South Asia (4)
Europe &
Central Asia (10)
Middle East &
North Africa (2)
Latin America &
Caribbean (4)
11
1
3
1
3
1
17
7
2
7
2
Full-PRSP
1 1
Interim-PRSP
4
before Interim-PRSP
PRSP Countries by HIPC Status
No. of Countries
5
Africa (35)
East Asia (6)
1 1
South Asia (4)
17
7
2
4
4
HIPC Completion Points reached
4
HIPC Decision Points reached
Europe &
Central Asia (10)
Middle East &
North Africa (2)
Latin America &
Caribbean (4)
10
HIPC Decision Points not yet reached
HIPC Sustainable Cases
1 1
Non-HIPC
1
3
PRSP Comprehensive Review:
by IDA and IMF
“The PRSP approach requires flexibility
so that both the process and the
content of poverty reduction strategies
can vary across countries in light of
national circumstances.”
[IDA/IMF March 15, 2002, p.7]
2. Country Types and
Appropriate Responses
• 3 key criteria for localizing PRSP
1. Relationship with donors
– Linkage between PRSP and debt relief
– Aid dependency
– Donor composition, etc.
2. Presence or absence of a national
development strategy and its quality
3. Causes of poverty
Aid Dependency
(US$ per capita and % of GDP, 1998)
ODA/GDP
%
30
Mozambique
Nicaragua
25
Laos
Mongolia
20
Mauritania
Burkina Faso
15
Tanzania
Cambodia
10
Zambia
Ghana
Nepal
Uganda
5
0
Bolivia
Honduras
Vietnam
Kenya
Bangladesh
Sri Lanka
PakistanIndonesia
0
20
40
60
80
100
120
140
ODA/capita
US$
Donor Composition
Vietnam : Major Donors
1998-2000　Average
Others
17.2%
Denmark
2.8%
Germany
3.6%
France
4.6%
ADB
12.0%
Japan
46.3%
IDA
13.5%
Donor Composition
Uganda: Major Donors
1998-2000 Average
UK
20.3%
Others
38.0%
Tanzania: Major Donors
1998-2000　Average
UK
13.2%
Others
41.0%
Japan
12.4%
IDA
14.1%
Nether
land
5.0%
IDA
12.2%
USA
6.9%
EU
7.4%
Denmark
9.2%
Germany Denmark
7.0%
7.2%
Nether
land
8.0%
ODA Composition:
Grants vs. Loans
Vietnam
Bolivia
Grants
Loans
Uganda
Tanzania
0%
20%
40%
60%
80%
100%
National Development Strategy
• How is PRSP—imported from
without—treated domestically?
• 2 prototypes:
– PRSP as a supplementary document
– PRSP as a primary document
PRSP as a Supplementary
Document
• Existing national development plans
guide budget, sector plans and PRSP.
• PRSP supplement, with special attention
to poverty reduction
– Cross-cutting perspective
– Participatory process, etc.
• Example: Vietnam
PRSP as a Supplementary
Document
Existing dev. plan
govern
PRSP
Sector plans
supplement
Budget
PRSP as a Primary Document
• PRSP co-exists with the national
development plan
• Newly introduced PRSP exerts a
stronger influence over budget and
sector plans.
• Examples: Tanzania, Uganda
PRSP as a Primary Document
Existing dev. plan
symbolic
PRSP
govern
Sector plans,
budget, MTEF,
aid procedures
Institutional Options
based on the Existing System
• PRSP-supplementary: donors should
respect and support the existing policy
framework (rather than replacing it
with PRSP).
• PRSP-primary: donors can utilize
PRSP & related systems and support
local capacity building around PRSP.
Causes of Poverty
• Need for correct matching between
diagnosis and prescription in each
country
– How poverty is created?
– How can growth reduce poverty?
[Ishikawa 2002]
Causes of Poverty (contd.)
• Case 1: a poor country equipped with
policies & programs to promote social
equity and social service delivery
system
– A good growth strategy is needed to
improve the purchasing power of the
general population.
– Example: Vietnam
Causes of Poverty (contd.)
• Case 2: a poor country constrained
with uneven opportunities due to social
discrimination (e.g., gender, racial and
ethnic discrimination)
– Formulation and implementation of
efficient & effective pro-poor targeting
measures are needed—in addition to a
growth strategy.
Infant Mortality Rate (2000)
100
(per 1,000 live births)
90
80
70
60
Average of low
income countries
Average of middle
income countries
50
40
30
20
Sources: World Bank, World Development Indicators 2002; For Taiwan, ADB, Key Indicators 2001 .
Singapore
Hong Kong
Japan
Taiwan
Malaysia
Korea
Vietnam
Thailand
China
Indonesia
Cambodia
Myanmar
Lao PDR
0
Philippines
10
%
Female Adult Illiteracy Rate (2000)
80
70
Average of low
income countries
60
50
40
Average of middle
income countries
30
20
Sources: World Bank, World Development Indicators 2002; For Taiw an, ADB, Key Indicators 2001 .
Korea
Thailand
Vietnam
Hong Kong
Singapore
Taiwan
Myanmar
Malaysia
Indonesia
China
Cambodia
Lao PDR
0
Philippines
10
Country Diversity and
Strategic Alternatives
• Reflect the stages of development
(economic, social, institutional etc.), and
other country-specific opportunities &
constraints.
• Identify an appropriate mix for each
country: “pro-poor targeted” vs. “broadbased growth” expenditures
[Ishikawa 2002]
3. Vietnam’s PRSP Experience
• Recognized internationally as “good
practice”: strong country ownership
• PRSP renamed to “Comprehensive
Poverty Reduction & Growth (CPRGS)
Strategy”
• CPRGS: as a document subordinate to
the core documents which embrace a
growth-oriented development vision.
Vietnam’s PRSP Experience
• Different perspective from the early
PRSPs
– First East Asian country to complete
Full-PRSP (May 2002)
– PRSP not linked to enhanced debt relief
program
About Vietnam
•
•
•
•
•
•
Population: 78.5 million
Located at the heart of East Asia
Years of wars and central planning
Income per capita: $390 per year
Life expectancy at births: 69 years
Female adult illiteracy rate: 9%
[2000 data, WB]
About Vietnam (contd.)
• Transition to a market economy
“Doi Moi” policy (1986～ ): domestic
liberalization
• International integration (early 1990s
～ ): trade, FDI, aid flows
• Achieving high growth rates (7～8% per
year) and halving the ratio of extreme
poverty in the 1990s
Progress in the Last Decade
Real GDP Growth
Poverty
％
12.0
70
10.0
60
8.0
50
6.0
40
%
58
37
30
25
4.0
20
2.0
15
10
0.0
86
9
1
1993
1998
0
87
88
89
90
91
92
93
94
95
96
97
98
99 000
2
01
Source: Government Statistics Office (GSO), Government of Vietnam.
Below Total Poverty
Line
Below Food Poverty
Line
Source: World Bank, “World Bank and Vietnam,”
[http://www.worldbank.or.jp/06group/RC_flame.htm].
Vietnam is a Large FDI Receiver
Low & middle incomecountries
0.9
% of GDP, average 1991-99
High Income countries
3.2
Chile
3.5
Malaysia
3.2
Argentina
1.6
Mexico
1.2
China
1.1
Brazil
1
Korea, Rep.
0.8
Vietnam (1991-00)
5.4
0
1
2
3
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 .
4
5
6
(%)
Asian Dynamism: 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
Per Capita GNP Growth
(%)
(%)
7
18
6
16
East Asia
14
5
East Asia
12
4
10
3
8
Sub Saharan Africa
2
6
Sub Saharan Africa
4
1
2
0
0
60s
70s
80s
90s
Source: Ministry of Economy, Trade and Industry, White Paper on International Trade 2001, p.78.
60s
70s
80s
90s
East Asia Reduced Poverty
Despite Currency Crisis
Population in Extreme Poverty (%)
60
50
40
30
20
10
0
1990
1999
East Asia
Latin
America
South Asia
SubSaharan
Africa
Asian Dynamism: Key Factor
• Vietnam with typical East Asian aspiration
• National goal: Industrialization &
Modernization by 2020 (10-Year Strategy
& 5-Year Plan)
• Very strong interest in narrowing intraregional gaps (vs. original ASEAN)
Asian Dynamism: Key Factor
• Also interested in infrastructure, HRD,
trade, FDI attraction
• Narrow “poverty reduction” approach, not
enough
PRSP Approach
Goal:
Poverty Reduction
MDGs
CDF/PRSP
Means:
Pro-Poor Policies
Growth Policies
East Asian Aspiration
Goal:
Equitable Growth
< Vietnam >
Industrialization &
Modernization
5-Year Plan & 10Year Strategy
Means:
Growth Policies
Social Policies
Lastly…
• Diversifying PRSP, more flexibility
• Specific criteria for localizing PRSP
• Options for institutional
arrangements
• Strategic alternatives: different
causes, different responses
Japan’s Cooperation
• Country ownership and partnership
• Supporting balanced growth with equity
– Creating the enabling environment for trade
& investment, through infrastructure, HRD,
policy advice, etc.
– Coping with risks & emerging social
problems
• Through an appropriate mix of grants,
loans, and technical cooperation
The END
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