Impacts of institutions on multidimensional poverty in Vietnam

toward sustainable poverty reduction on the basis of the local uniqueness of provinces; (ii) Revision of multi-dimensional poverty reduction policies in the ways in which they not only concentrate on ‘the most deprived’ (the poor and rural areas), but also take into account the multi-dimensional poverty reduction policies in non- poor localities and urban areas where are in need of suitable institutions. 6. The structure of the thesis In addition to the introduction, conclusion, list of tables and references, the thesis is presented in 5 chapters with the following structure: Chapter 1: Literature Review Chapter 2: Theoretical Framework Of Impacts Of Institutions On Multidimensional Poverty Chapter 3: Research Model And Methods Chapter 4: The Situation Of Impacts Of Institutions On Multidimensional Poverty In Vietnam Chapter 5: Solutions To Increase The Impact Of Institutions On Multidimensional Poverty In Vietnam CHAPTER 1: LITERATURE REVIEW 1.1. Past research on multidimensional poverty The thesis has reviewed domestic and international studies according to the following groups of issues: (i) the conceptualization of multidimensional poverty; (ii) factors affecting poverty in general and multidimensional poverty 8 in particular. Many studies confirmed the correlation between poverty and the local institutions and other specific measures of institutions such as factors related to policy making process, and organization of the policies implementation. Additionally, most of these studies suggest that good institutions in overall will bring positive effect on poverty reduction, while specific aspects of institutions (through institutional metrics) have different effects on poverty reduction. 1.2. Past research on institution There are many studies on the content of the institution that are reviewed in the research of the thesis. There are 3 historical lines of research on institutions: (1) Institutions as rules and laws; (2) Institutions to be considered from the perspective of organization; and (3) The institution that includes the above two factors; rules and organizations ("rules of the game" and "players"). It can be seen that domestic and foreign studies all say that institutions include "rules of the game – rules and laws", "players - organizations" and the additional part is "how to play". 1.3. Past research on the impacts of institution on multidimensional poverty In recent years, there have been many debated studies considering whether institutions have impacts on poverty reduction and if so, whether the impact is positive or negative, direct or indirect. Majority of the papers suggested that institutions play an important role in national poverty reduction outcomes. Many of them used different institutional metrics which can result in different effects on poverty reduction. Additionally, there are several studies concluded that good institutions have no impact on poverty reduction in the short term, but in the long run it can bring a positive effect. Thus, with the diversity in the institutional assessment measures as well as the impact assessment methods, the literature results are relatively similar when it comes to the overall conclusion that good institutions will positively contribute to poverty reduction. But with different development conditions and contexts, specific aspects of a good institution will have different impacts on the goal of poverty reduction. Since then, it is essential to verify the specific 9 impact of institutions on poverty in the context of a transitional economy like Vietnam. 1.4. General reviews of the literature 1.4.1. The primary issues addressed in the literature First, majority of the literature were conducted to address the theoretical issues of institutions and poverty. Regarding poverty, all studies have shown that the issues of fighting and eliminating poverty is one of the goals that need to be addressed in the development process of any country. In terms of institutions, the concept of institutions is agreed to be defined as the rules "of a game" through which people and the authorities act as "players" to follow all the rules. Furthermore, the literature has shown the role of institutions in regulating people and community behaviors. Additionally, institutions also contribute to protecting the individual "safe zone", preventing and resolving economic and social conflicts. Second, the literature has given specific measures of institutional quality assessment. From a general perspective, these metrics are scientifically built and synthesized from reliable data sources, which led to significant findings. In addition, in each specific condition, the scholars have used this set of measures flexibly in analyzing the impact of institutions on poverty or some other aspects such as economic growth. Third, the literature has shown that institutions have an impact on poverty in specific aspects: (1) institutions impact poverty through institutional aggregate indexes measurement; (2) each aspect of institutions affects poverty and (3) institutions affect each aspect of multidimensional poverty such as education and health. Fourth, to assess the impact of institutions on poverty, many studies have used certain estimation methods such as ordinary least squares (OLS), percentile regression methods or generalized method of moments (GMM) to evaluate the impact of institutions on poverty. The results from the estimation models all show that good institutions help reduce poverty. In addition, there have been many studies that concentrated on the impacts of each aspect of the institution on poverty reduction. However, with different development conditions and circumstances, the impact of each aspect of the institution on the poverty reduction also differs between countries, or countries in different stages of development. 10 1.4.2. Other issues and research gap Although there have been many issues mentioned in the literature review, in the research perspective of the thesis, there are still many points that have not been mentioned, thereby this thesis identified and attempted to solve several research gaps. First, the implications of institutions on poverty are debatable. As indicated in the literature review, there are several studies concluded that institutions play an important role in poverty reduction. Yet there are also many studies showed that the role of institutions is still relatively weak in implementing the poverty reduction activities, in some cases, it even made the poverty more severe. Second, although there are many studies on the impact of institutions on poverty, not many of them were carried out for the context of Vietnam, especially in case of using the criteria of poverty measurement in terms of a multidimensional approach. Most of the above studies focused on measuring the impact of institutions on poverty, yet from the perspective of income approaches. However, this poverty measure does not clearly reflect the picture of poverty, rather the nature of poverty has been confirmed to be multidimensional (World Bank, 2000; UNDP, 2010). Third, many indicators to measure institutions have been introduced, yet none of them are clearly appropriate when measuring the impact of institutions on multidimensional poverty in the context of a rapid transitional country like Vietnam which is said by Acemoglu et al. (2013) as the phenomenon of "Institutional drift". Fourth, regarding the models and estimation methods for the impact of institutions on poverty, they are not only limited by focusing on the single- dimensional poverty approach as mentioned above but also have been mainly being used to study at the national level. From the literature review, it can be seen that there were very few researches carried out based on a local area within a country. The thesis is one of the first studies conducted in this scope. In addition, most of the research models obtained from the review require relatively large dataset over many years, however, since the introduction of the 11 multi-dimensional poverty assessment approach has been established in Vietnam for five years (since 2016), multidimensional poverty data in the country are relatively limited. Therefore, these models are difficult to apply in assessing the impact of institutions on multidimensional poverty in Vietnam. Nevertheless, the thesis found a new and more appropriate approach in the context of limited data in Vietnam. On the basis of inheriting international research results, this thesis examined the impact of institutions on multidimensional poverty in Vietnam in 2 perspectives: (i) finding the "transmission channels" to distribute the impact of institutions on multidimensional poverty in Vietnam, (ii) finding out the specific impact of institutions on multidimensional poverty. Research results will be an important basis to help Vietnam deal with the relationship between institution and multidimensional poverty, and then move towards the realization of the sustainable development goal. Based on the research gaps above, the thesis will solve the following problems: Completing the theoretical basis for assessing the institutional impact on multidimensional poverty including synthesizing the transmission channel of the institutional impacts on multidimensional poverty as well as identifying the influencing factors and the institutional impact assessment model. Comprehensively analyzing and assessing the current situation of institutional impacts on multidimensional poverty in Vietnam according to the following contents: Status of current institution, status of current multidimensional poverty, status of impact and factors affecting the multi- dimensional poverty. From there, the thesis can conclude the achievements and existing problems of institutions and multidimensional poverty in Vietnam in recent years. On the basis of analyzing the causes of existing problems, the thesis will propose appropriate recommendation to enhance the institutional impacts on multidimensional poverty in Vietnam, towards the goal of sustainable and better multidimensional poverty reduction in the next period. CHAPTER 2: THEORETICAL FRAMEWORK OF IMPACTS OF INSTITUTIONS ON MULTIDIMENSIONAL POVERTY 12 2.1. Multidimensional poverty 2.1.1. Conceptualization of multidimensional poverty The international views on the concept of multidimensional poverty has been increasingly improved in accordance with the current conditions: (i) UNDP's perspective in 1997, multidimensional poverty did not mention the material dimension; (ii) The World Bank's view in 2000, adding an aspect of quality of life, but not yet be specific in distinguishing between the aspects of education and health (two extremely important aspects in the human development); (iii) Vietnam's view in 2015 has fully inherited different aspects from the previous views and added the missing aspects including the income aspect within the connotation of multidimensional poverty. With the definition and the substantive approach to multidimensional poverty mentioned above, the thesis uses the connotation of multidimensional poverty based on the concept of Vietnam’s view in 2015 because it shows the best inclusion of different dimensions of poverty. 2.1.2. Multidimensional poverty measures There are many multidimensional poverty measures used in different countries, yet they are all based on the international Multidimensional Poverty Index (MPI) developed by the Oxford Poverty and Human Development Initiative (OPHI) of Oxford University based on the Alkire and Foster method. Vietnam officially applies a multidimensional poverty assessment from 2016 to 2020. Multi-dimensional poverty measurement in Vietnam uses the Alkire and Foster method because of its simplicity and popularity. Accordingly, Vietnam uses 5 dimensions of poverty measurement including Education, Health, Housing, Living Conditions and Access to Information. Regarding the research scope, the thesis uses Vietnam's approach in multidimensional poverty assessment, as well as in analyzing the institutional impact on multidimensional poverty due to the appropriateness of the measurement indicators to the real situation in Vietnam during the transitional period from single-dimensional poverty to multidimensional poverty. 2.2. Institution 2.2.1. Conceptualization of institution 13 At least three concepts of institutions are used universally both academically and practically. In general, these concepts define the institution as an element to organize and arrange social interactions. However, each concept will emphasize on different aspects of the institution. One of them emphasizes institutions as "rules and laws", another emphasizes institution as the "role of organizations in organizing human behaviors". The last as well as the most commonly used concept emphasizes institution as both aspects above: "rules" and "players" (organizations). 2.2.2. Measures of institution Different international institutional metrics (Global Governance Index; Corruption Perceptions Index ...), mainly assess institutions at the national level, and very few of them is applicable to the local area within a country. From a more practical point of view, these indicators do not make much sense for a country because it is impossible to look at institutional problems on a single level since many problems arise due to the interactions between authorities. Therefore, within the institutional approach, the thesis chooses institutional measurement at the local level. In Vietnam, apart from being evaluated, compared and ranked by international organizations according to international criteria, Vietnam has actively developed and used a number of indicators to evaluate and rank institutions for provinces and cities under (the jurisdiction of) the central government such as: PCI (Provincial Competitiveness Index), PAPI (The Viet Nam Provincial Governance and Public), PAR INDEX (Public Administration Reform Index), the SIPAS (Satisfaction Index of Public Administrative Services). In the above institutional assessment indicators, the thesis selects PAPI index to evaluate the institutions in Vietnam. 2.3. Transmission channels for the impact of institution on multidimensional poverty It can be seen that poverty is not only the result of the economic phenomena but also the result of social and political phenomena, as well as the interactive relationship between economic, social and political factors together. 14 Combining the relationship between these factors is regarded as the institution, which is the important factor contributing to poverty reduction. Institutions affects poverty by two "transmission channels", either directly or indirectly through a number of intermediaries. Institutions significantly affect the speed and quality of economic growth and then economic growth affects poverty, which is considered as an indirect "transmission channel" via economic growth and distribution of income. In addition, institutions - via formal institutional aspects (community participation, legal framework system, public administration reform, public sector corruption control) can directly affect poverty (in terms of both income and multidimensional). 2.4. Factors affecting the impact of institution on multidimensional poverty 2.4.1. Factors of institutional capacity Factors of institutional capacity include: (1) Awareness, thinking and capacity of the leaders and state administrative apparatus; (2) Decentralization in level and authority of state administrative management and finance; (3) Factors related to the system of policies to resolve the relationship between institutions and multidimensional poverty; (4) The capacity factors of poverty reduction officials; and (5) Resource factors. 2.4.2. Factors of capacity of the poor The poor's awareness of the socio-economic development goals in general and the State's poverty reduction policies in particular is still limited. This often stems from the level of transparency, completeness and appropriateness in the provision of information by the state and from the poor's ability to access information. In terms of the poor's ability to access information to policy, the state poverty reduction plan is often quite passive. In addition, the capacity of the poor is also quite limited in terms of lack of social understanding, the confidence, the ability to detect, solve problems and access new information and knowledge. Their social status is often inferior, their voices are rarely heard, and benefits are easily overlooked. Thus, they have low resource access and lack or inadequate information. Therefore, it will lead to a positive or limited or even negative influence of institution on the multidimensional poverty aspects of the household. 15 CHAPTER 3: RESEARCH MODEL AND METHODS To achieve research objectives, appropriate use of research methods is very important. This chapter focused on describing research methods used in the thesis to answer research questions including research methods, data sources and data analysis methods. The analytical framework of the thesis is the premise of research methods and data analysis. 3.1. Analytical framework From the theoretical overview, the thesis used the following analytical framework to achieve the research objectives: Institutions - The nature - Evaluation criteria Multi- dimensional Poverty - The nature - Evaluation criteria Factors influencing impacts of institutions on multidimensional poverty. The situation of institutions in Vietnam The situation of multidimensional poverty in Vietnam Evaluate the results of the impacts of institutions on multidimensional poverty in Vietnam Direct impact analysis through quantitative methods Propose solutions and policy directions to enhance institutional impacts on multidimensional poverty based on the following reasons. 16 Figure 3.1. Analytical framework Source: Phd Candidate 3.2. Research methods 3.2.1. Methods of collecting and processing data From the research objectives and analytical framework, in order to collect and process primary and secondary data, the thesis uses the following methods: (i) analysis and synthesis methods; (ii) Desk research method; (iii) descriptive statistical analysis methods; and (iv) quantitative research methods. 3.2.2. Research model The thesis inherited the models outlined in the study of Massimo Baldini et al (2017) and the study of Christoph Jindra and Ana Vaz (2019). The model to assess the impacts of institutions on multidimensional poverty is as follow: mpia=P multidimensional poverty = β0+ β1LogLPAPI+ β2Xia+ β3Za+year dummy+ εit 1 3.2.3. Model estimation method The thesis uses Multilevel Probit model to evaluate the impacts of institutions on multidimensional poverty. 3.2.4. The appropriateness of the estimation method of the Multilevel Probit model in the thesis From the literature review, there are different estimation methods can be used to assess the impact of institutions on poverty. In addition to the estimation method of the binary Probit regression model, there are other methods, namely: (i) OLS estimation method; (ii) System GMM method; (iii) Quantile regression. The above three methods require the dependent variable to be a continuous variable over time. Most of the studies using the above estimation methods used the poverty rate (by income) of each country in different years. Meanwhile, the dependent variable used in this thesis is a dummy variable with multidimensional poverty or non-multidimensional poverty of the household. Thesis using multi-level data (Vietnam Household Living Standards Survey (VHLSS)), in which households are integrated in the local / regional. Because of the characteristics of the dependent variable and research data, and inheriting the study of Massimo Baldini et al (2017) and the study of Christoph Jindra and 17 Ana Vaz (2019), the thesis chose the estimation method of the Multilevel Probit regression model. 3.2.5. Data source In order to apply the analytical framework outlined above, the thesis exploited secondary data sources including published and raw data from different surveys. The main data used in the thesis are raw data from the Vietnam Household Living Standard Survey (VHLSS). In addition, the thesis uses published data from the Provencial Governance and Public Administration Performance Index (PAPI), from national and local statistical yearbooks and other surveys. CHAPTER 4 THE SITUATION OF IMPACTS OF INSTITUTIONS ON MULTIDIMENSIONAL POVERTY IN VIETNAM 4.1. The situation of institutions and multidimensional poverty in Vietnam 4.1.1. The situation of institutions in Vietnam To analyze the institutional situation in Vietnam, the thesis uses a number of basic indicators that have been used in many studies, namely: (1) Worldwide Governance Indicators (WGI) used by World Bank; (2) Institutional pillars in some indicators such as: Global Competitiveness Index (GCI), Global Innovation Index (GII); (3) Vietnam's PAPI. The international indicators analysis shows that Vietnam is getting an improvement in the institutional aspect, but reform is still slow. Analysis of PAPI in Vietnam shows that, after decreasing in 2015, the average PAPI at the provincial level tends to increase steadily, from 34 in 2015 to 37.4 in 2019. Thus, in 10 years (2011 - 2019), Vietnam has recorded specific progress in improving the efficiency of provincial governance and public administration. Especially in the last 5 years, the overall index has been on the rise, showing substantial changes in state governance and provincial public service delivery in Vietnam. 18 Five of the six indexes tended to increase over the entire period. In which, the two indexes, “Corruption control in public sector” and “Publicity and transparency in decision making” have the most obvious increase. 4.1.2. The situation of multidimensional poverty in Vietnam The thesis has analyzed the general multidimensional poverty situation in Vietnam. The results show that: (i) Multidimensional poverty rate tends to decrease gradually, but poverty reduction speed is slow; (ii) The poverty picture becomes clearer if assessed using to multidimensional criteria. Regarding the welfare dimensions insufficient levels, the thesis’s results show that: (i) The insufficient rate of national multidimensional poverty indicators decreased in the period 2016 - 2018, except for “information access poverty”; (ii) The insufficient levels of adult’s educational level, drinking water sources and hygienic latrines remain high. Decomposing the causes of multidimensional poverty, the analysis shows that indexes of “health insurance”, “housing quality” and “telecommunications services usage” of households tend to decrease while other indexes tend to increase. Thus, in order to quickly reduce multidimensional poverty in Vietnam in the coming time, it is necessary to have drastic solutions, develop policies and improve institutions to increase the ability to attend school, improve housing system, water quality and increase ownership of information access property. Besides, the thesis also analyzes multidimensional poverty among population groups, including (i) gender and age; (ii) ethnic groups; (iii) urban and rural areas; (iv) regions. 4.2. Situation of impacts of institutions on multidimensional poverty in Vietnam To analyze the impact of institutions on multidimensional poverty, the thesis used 8 research models and grouped them into the following model groups: Group 1: assessing the impact of factors affecting the probability of multi-dimensional poverty of households. Group 2: assessing the impacts of institutions and local characteristics variables on the probability of multidimensional poverty of households. This group of models answered the first research question of the thesis. Group 3: Assessing the interaction impacts 19 of institutions on probability of multidimensional poverty of households living in urban, rural, and regions with different levels of development. This group was formulated to answer the second research question of the thesis. Group 4: assessing the impact of specific aspects of