Poverty, inequality and the non-farm economy

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Vietnam has become a showpiece in income poverty reduction in recent years. However, regional and provincial disparities remained high and in some cases even increased. With agricultural production being constantly faced with environmental hazards, rural non-farm jobs become a key component in poverty reduction strategies. The analysis at hand leads to the finding that besides generally known influential household characteristics, increased off-farm income shares, even in remote regions, increases household incomes and consumption asset holdings. Furthermore, inequality among households with higher shares of income apart from farming activities is less pronounced. Nevertheless, income structure is extremely volatile with respect to farm vs. non-farm incomes. It is shown that households that changed their income sources were worse off as compared to non-switching households. Therefore, company data were analyzed to identify bottlenecks in their growth that also hinders job creation. The companies in three provinces, although all of them are in Middle Vietnam and among the poorest of the Vietnamese provinces, have considerably different needs based on their history. Based on these differences a „one strategy fits all“ solution on how to achieve increased investments and growth in remote provinces cannot be given due to the different needs and conditions.