The private sector and multidimensional poverty reduction in Vietnam: A cross‐province panel data analysis

Abstract

AbstractThis study examines the role of private sector development (PSD) in multidimensional poverty alleviation in Vietnam, using provincial panel data for the 2010–2019 period. PSD is measured as the proportion of the workforce in (i) all private firms, (ii) domestic private firms, and (iii) multinational firms, respectively. We use a two‐step general method of moment estimator to account for unobservable heterogeneity, simultaneity, and the relationship between current provincial characteristics and past provincial poverty. We find that each percentage point increase in private sector employment contributes to a reduction of 0.30% and 0.31% in multidimensional poverty and monetary poverty, respectively. Notably, further analysis confirms that a similar effect is also found for both domestic private and multinational enterprises. In addition, our study finds that economic growth and educational attainment emerge as major factors mitigating multidimensional and unidimensional poverty, while income inequality increases both poverty measures.