Chapter 6 in Jennie I Litvack and Dennis A. Rondinelli, eds. Transition to a market economy has stimulated strong growth in many parts of Vietnam since the late 1980s, and continued broad-based growth will help raise living standards for most people. But the country is starting from an extremely low base with extensive poverty and underdeveloped institutional structures. Many people will continue to be poor and most will remain vulnerable to risk in the foreseeable future. Some people will be slower to respond to market incentives, and others, even among those who respond quickly to market incentives, will face catastrophic shocks.
Households also confront shifting levels of productivity and needs over their life cycle.
Many of these issues were of less concern under the former command economy, where lack of mobility fostered community and family solidarity and households belonged to local cooperatives that provided for the welfare of their members. Developing safety nets to replace these faltering institutions is an important part of the successful transition to a market economy. Vietnam is improving its poverty alleviation and safety net programs, but much more needs to be done to modify the design of existing programs and fill large gaps in the systems and resources needed to protect Vietnam's poor and vulnerable. This project carried out a critical overview of the public safety net programs in Vietnam that aim to protect those outside the formal employment sectors, notably those in the rural economy and urban informal sector. It began by examining the principal sources of vulnerability for Vietnamese households and what is known about household coping strategies.