Industrial growth with poverty reduction and equity? Predictions from nighttime lights in Vietnam

The characteristic of Vietnam’s development after the Doi Moi has been triple successes: a high economic growth rate, significant poverty reduction, and relatively little inequality. Using disaggregated provincial-level data of Vietnam from 2002 to 2010, this study verifies the relationship between sectoral composition of growth and poverty reduction with the consideration of initial inequality. The estimation results suggest that industrial sector growth is a strong driver of poverty reduction, while agriculture do not. The results are robust using night light intensity as a proxy for industrial outputs to overcome insufficient quality and potential manipulation of GDP statistics, and the coefficient stability test proposed by Oster (2019). Further, we find that poverty and initial inequality do not have a stable statistical relationship. These results could be Vietnam specific and only apply to other developing countries with a high economic growth rate, substantial poverty reduction, and little inequality